Lululemon (LULU) Gains as KeyBanc Pricing Analysis Points to AUR Growth

Shares of Lululemon Athletica Inc. (NASDAQ: LULU) are higher Wednesday (+3.9%) after a pricing analysis from KeyBanc analyst Jessica Schmidt.

"We conducted a pricing analysis of the yoga/athletic market, digging into categories with pricing opportys (bras/tanks) and its important pants business," Schmidt commented. We analyzed LULU’s SKUs in these categories (19 bras, 25 tanks, 79 bottoms), comparing to our prior analysis and 29 competitors. Consistent with our prior note, we are seeing LULU, particularly in pants, address the higher-end market innovatively. Interestingly, its entry level offering remains important, and in bras, the mix is up. We think the more mature pant category best indicates the pricing architecture LULU will broadly implement, using innovation to elevate the assortment at the high-end and maintaining an entry offering. The implementation of the pricing architecture will continue to drive AUR enhancements, an important component of its sustainable +MSD comp"

The analyst notes LULU’s average pant price increased to $109 in Dec., up ~2% from $107 in Aug. In bras and tanks, August pricing
analysis, LULU has reduced its SKU count to 19 from 27 (-30%) and raised prices a modest 2.5% to $57.50. The remain priced below peers.

KeyBanc maintained an Overweight rating and price target of $89 on LULU.

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 $66.85 yesterday.

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