1. Lululemon athletica
Lululemon (LULU) is a Canadian yoga and athletic wear retailer with stores in Europe, the United States and Canada.
Lululemon’s problems are well known. In 2013, it had to recall its most popular yoga pants because of a quality problem with the pants being too sheer. Then the CEO resigned and a multi-month search for a new CEO commenced. Only recently, was new management put in place.
On Jan 13, Lululemon warned on the fourth quarter stating that comparable store-sales will be in the negative low-to-mid single digits. EPS guidance was also cut.
“We were on track to deliver on our sales and earnings guidance through the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully,” said John Currie, lululemon’s CFO.
It warned just after the first polar vortex when half the United States and Canada was huddled in their homes. Since then, there has been yet another polar vortex and the bad winter weather has continued.
It’s On Sale
At the beginning of 2013, lululemon was trading at 40x forward earnings. Now, after shares have plunged, it is trading at just 20x.
- Forward P/E = 20
- Fiscal 2013 expected EPS growth: 2.3%
- Fiscal 2014 expected EPS growth: 16.7%
Zacks Rank #3 (Hold)
Shares have fallen about 22% in the last month. If you liked lululemon before, why not buy it at nearly 25% off?