Analyst Randal Konik from Jefferies maintained a Sell rating on Lululemon Athletica (LULU – Research Report) and keeping the price target at $220.00.
Randal Konik has given his Sell rating due to a combination of factors impacting Lululemon Athletica’s current market position and future prospects. The company is attempting to expand its total addressable market by introducing non-core categories and styles, such as footwear and logo-centric apparel, which deviates from its traditional brand image. This strategy is seen as a response to slowing growth and increased competition, as well as a shift in spending by core customers towards competitors.
The collaboration with Saul Nash, which appears off-brand, has not generated significant interest or sales, indicating a lack of added brand appeal. Inventory levels have risen for the first time in over four quarters, leading to increased markdowns and pressure on maintaining peak gross margins. Consequently, future earnings guidance is expected to be disappointing, and the stock price may continue to decline as the market loses confidence in the company’s ability to rejuvenate growth. The situation is reminiscent of Under Armour’s unsuccessful attempt to broaden its audience with an off-brand line in 2016.
According to TipRanks, Konik is an analyst with an average return of -1.4% and a 40.64% success rate. Konik covers the Consumer Cyclical sector, focusing on stocks such as Lululemon Athletica, Nike, and SharkNinja, Inc..
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