Company Performance - Lululemon athletica inc. (LULU) stock has declined by 4.2% over the past month, primarily due to expectations of higher expenses and uncertainty from increased tariffs on imports from China and Mexico [1][15] - The stock's performance is below the broader sector's growth of 0.2% and the S&P 500 index's decline of 1.2%, but it has outperformed the Textile - Apparel industry's decline of 5.6% [2] Valuation Metrics - LULU's current share price is 271.27,reflectinga20226.01 and a 35.9% discount from its 52-week high of 423.32[6]−Theforward12−monthprice−to−earnings(P/E)multipleis17.88X,significantlyhigherthantheZacksTextile−Apparelindustryaverageof10.44X,indicatingarelativelyexpensivevaluation[8][10]−Theprice−to−sales(P/S)ratiostandsat2.86X,abovetheindustry′s1.63X,contributingtoinvestorunease[9]EarningsOutlook−Forthefirstquarteroffiscal2025,Lululemonanticipatesflatyear−over−yeargrossmargins,withoperatingmarginsprojectedtodeclineby120basispointsduetoincreasedexpenses[16][19]−Thecompanyforecastsfiscal2025EPSbetween14.95 and 15.15,reflectingarisefrom14.64 in fiscal 2024, despite currency headwinds expected to reduce EPS by 30-35 cents [19] Growth Strategy - Lululemon's Power of Three X2 growth plan aims for a total net revenue CAGR of 15% from 2021 to 2026, targeting $12.5 billion in net revenues by 2026 [14][23] - The company is focusing on expanding its international presence, particularly in key markets like Mainland China, and aims for international revenues to account for nearly 50% of total sales by the end of 2026 [22] Investor Sentiment - Despite a strong performance last quarter, investor sentiment remains cautious due to rising tariffs and unfavorable currency exchange rates, reflected in a downtrend in earnings estimates [15][20] - The Zacks Consensus Estimate for LULU's fiscal 2025 and 2026 earnings per share has declined by 2% and 1.6%, respectively, indicating skepticism about the company's near-term growth potential [20]
lululemon(LULU) ZACKS·2025-04-30 13:20