Lululemon maintains its flow with shares hitting a record despite supply chain challenges

Upbeat analyst teams raised their value targets for Lululemon Athletica Inc. after the corporate, identified for its yoga gear, reported earnings that blew previous expectations.

Wells Fargo moved its value goal to $410 from $335 and maintained its equal weight inventory ranking.

“Gross margins have been sturdy, retailer productiveness returned to 2019 ranges, digital momentum continued in opposition to powerful compares, quarter-to-date momentum stays sturdy, and Lululemon’s personal agile provide chain is permitting them to largely meet demand,” analysts wrote, noting that the corporate additionally raised its guidance and is now anticipated to exceed a earlier $6 billion goal. 

“All in, we discovered only a few holes to select at in Lululemon’s print.”

Learn: Athletic trends have given DSW parent Designer Brands a boost but Nike departure looms

Stifel raised its value goal to $500 from $445 and maintained its purchase inventory ranking.

And Cowen lifted its value goal to $520 from $476. Analysts maintained their outperform inventory ranking.

“Administration expressed vital confidence within the tempo of its enterprise and being within the early innings of its progress potential throughout product strains, actions, classes, and areas,” analysts stated.

“Shopper response to its supplies innovation stays broad primarily based, supporting its premium positioning and potential for ongoing margin growth.”

The earnings outcomes despatched shares hovering 10.5% in Thursday buying and selling, closing at a report for the inventory of $420.71.


inventory has run up practically 21% for the yr to this point, outpacing the S&P 500 index
which is up 19.6% for the interval.

Lululemon isn’t simply using a wave generated by the athleisure development. The corporate has been in a position to overcome the availability chain challenges which have plagued many names throughout the buyer area. Wells Fargo notes that about 30% of Lululemon’s sourcing is from Vietnam, which has seen its manufacturing operations hit laborious by COVID-19.

See: Foot Locker and Adidas join list of companies citing COVID-related supply chain challenges in Vietnam heading into the holiday shopping season

MKM Companions analysts say the outcomes level to Lululemon as greater than only a “pandemic play.”

“Lululemon’s 2Q was considerably higher than we anticipated, owing disproportionately to each stronger retailer gross sales (with retailer productiveness according to 2019 ranges),” analysts wrote, noting progress in e-commerce as properly.

“And but, gross sales have been stated to be held again by provide chain points/delayed stock. Equally spectacular was a meaningfully extra favorable gross margin, as greater air-freight was offset by vital mounted value leverage and decrease markdowns vs. 2019, in addition to decrease SG&A deleverage.”

MKM charges Lululemon inventory purchase with a $468 value goal, up from $419.

JPMorgan additionally raised its value goal to $500 from $450 in a notice that maintains its chubby inventory ranking.

UBS took a extra reasonable tone, saying the inventory value already accounts for the anticipated earnings progress. Analysts additionally say the Mirror acquisition will weigh on EBIT margins.

UBS charges Lululemon inventory impartial with a $375 value goal. | Lululemon maintains its move with shares hitting a report regardless of provide chain challenges


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