Lululemon (LULU) Promotion was Previously Contemplated - Oppenheimer
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Oppenheimer analyst Anna Andreeva notes that over the past few days, mark downs at Lululemon Athletica Inc. (NASDAQ: LULU) clearance "we made too much" portion of ecomm increased substantially, creating additional fear on already controversial stock. However, according to the company, this was contemplated in the 3Q16 guidance provided in September and is part of efforts to keep stores clean. Per the firm's checks, clearance at actual stores limited to 1-2 racks at most.
Andreeva notes this activity comes on top of the Boston warehouse sale last year (10/16-10/18, $3M sales) and is significantly less deep in units promoted (hence less margin-dilutive given also online).
"With shares down substantially from August highs, we believe buy-side expectations embedding both sales and margin miss; comps in line with MSD guide; and still potential for better margins sufficient at these levels," the analyst said.
The firm maintained an Outperform rating but lowered its price target to $70.00 (from $80.00).
Shares of Lululemon Athletica Inc. closed at $56.30 yesterday.
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