Decreasing 48% compared to its peak, is this stock of growth of the market a purchase now?
Lululemon Athletica (Nasdaq: Lulu) Perhaps not to have the profile of a traditional stock of rear, but it has been one of the most efficient stocks of the last 20 years.
More than any other company, Lululemon is responsible for making athletics a category of massive clothing, and it has made it one of the most precious clothing companies in the world.
To return to its IPO of 2006, the stock has increased by around 1,800%, and even in the last decade, the stock has gained more than 300% because it has continued to provide strong growth.
However, more recently, the stock had trouble. After having culminated at the end of 2023, actions dropped concerns about its evaluation, the slowdown in growth, now the trade war and the broader threat to the global economy. The stock is now down 48% compared to its peak.
Lululemon has dropped in its report on the profits of the first quarter, comparable sales growth has slowed down to only 1% with complement of 2% in the Americas. Revenues during the quarter increased by 7% to $ 2.37 billion while the company continues to open new stores, which was estimated.
More down the income statement, the gross margin increased from 57.7% to 58.3%, but operating income increased from $ 1% to $ 438.6 million, the operating margin, the operating margin dropped from 110 base points to 18.5% due to an increase in sales costs, general and administrative.
In the end, action per share increased from $ 2.54 to $ 2.60, which disturbed consensus of $ 2.59.
What really put pressure on the stock is the directives of the company, partly due to the impact of the prices, because the management said that the price increases to absorb the prices would be targeted and limited.
For the full year, Lululemon maintained advice on income of $ 11.15 billion to $ 11.3 billion, or income growth of 6% in the middle. However, he reduced his orientations on full year profits per year from $ 14.95 to $ 15.15 to $ 14.58 to $ 14.78.
The second quarter advice also missed the brand.
Lululemon’s decision to maintain advice on income with a stable growth rate from the first quarter shows that it does not anticipate a significant impact on demand. On the contrary, the challenges that the company is faced with is faced by the cost, mainly due to prices.
The company now expects the operating room to drop by 160 base points, weighing on profit per share.
While the growth of Lululemon has slowed down on its main North American market, the company continues to see a long track in China, which represents its largest market for the growth of new stores.
