Sterne Agee Cuts Lululemon (LULU) to Underperform; Says Company has Alienated Customer
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Price: $364.68 --0%
Rating Summary:
32 Buy, 11 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 9 | Down: 6 | New: 4
Rating Summary:
32 Buy, 11 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 9 | Down: 6 | New: 4
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(Updated - November 14, 2013 7:13 AM EST)
Sterne Agee downgraded Lululemon Athletica Inc. (NASDAQ: LULU) from Neutral to Underperform with a price target of $56.00 (from $75.00). Analyst Sam Poser believes the company is alienating its customer.
"The current valuation of over 27X 2014E is not sustainable as the company is alienating the customer. Recent comments from LULU's Chairman/founder, on top of shear and pilling problems, and the ongoing search for a new CEO lead us to the aforementioned conclusion. We see little risk to current trends but expect SSS deceleration in '14. Lowering 2014 EPS and SSS estimates from $2.49 and +8.2% to $2.33 and +6%," said Poser.
"Lululemon active-wear pants may not be really good for active use, according to the recent comments of LULU's Chairman Chip Wilson. He said that "some women's bodies just actually don't work for it [the pants]." He also said that the rubbing of the thighs over time will cause the pilling and poor performance of the product. Mr. Wilson did appear to apologize to the LULU employees for the impact of his comments, but did not retract his original statements. Based on our checks and retail experience, we believe that the core LULU customer has been alienated and will begin to look for yoga and active-wear pants from the likes of Nike, Under Armour, Athleta, and numerous other brands," he added.
For an analyst ratings summary and ratings history on Lululemon Athletica Inc. click here. For more ratings news on Lululemon Athletica Inc. click here.
Shares of Lululemon Athletica Inc. closed at $68.98 yesterday.
Sterne Agee downgraded Lululemon Athletica Inc. (NASDAQ: LULU) from Neutral to Underperform with a price target of $56.00 (from $75.00). Analyst Sam Poser believes the company is alienating its customer.
"The current valuation of over 27X 2014E is not sustainable as the company is alienating the customer. Recent comments from LULU's Chairman/founder, on top of shear and pilling problems, and the ongoing search for a new CEO lead us to the aforementioned conclusion. We see little risk to current trends but expect SSS deceleration in '14. Lowering 2014 EPS and SSS estimates from $2.49 and +8.2% to $2.33 and +6%," said Poser.
"Lululemon active-wear pants may not be really good for active use, according to the recent comments of LULU's Chairman Chip Wilson. He said that "some women's bodies just actually don't work for it [the pants]." He also said that the rubbing of the thighs over time will cause the pilling and poor performance of the product. Mr. Wilson did appear to apologize to the LULU employees for the impact of his comments, but did not retract his original statements. Based on our checks and retail experience, we believe that the core LULU customer has been alienated and will begin to look for yoga and active-wear pants from the likes of Nike, Under Armour, Athleta, and numerous other brands," he added.
For an analyst ratings summary and ratings history on Lululemon Athletica Inc. click here. For more ratings news on Lululemon Athletica Inc. click here.
Shares of Lululemon Athletica Inc. closed at $68.98 yesterday.
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