Follow Lululemon to never miss an important update.
The leaders of the US and China are scheduled to meet at the White House this Thursday. The goal is to maintain a trade truce that has prevented new tariffs, which are taxes on imported goods, from being added to products moving between the two countries.
This is a key development for Lululemon because China is its fastest-growing market and a major part of its future growth plans. Any progress in keeping trade stable reduces the risk of higher costs for the company's supply chain or retaliatory measures that could make it harder to sell its premium apparel to Chinese customers.
Source: Reuters
Retail sales in the US grew more than expected in August as back-to-school shopping helped offset higher costs for essentials like gasoline. Growth was broad, with 12 out of 13 categories showing higher sales than the month before.
This is a helpful sign for Lululemon, which has been dealing with a visible slowdown in its core North American market. While the company is leaning on international growth to carry the business, steady spending at home suggests the domestic environment is not weakening as fast as some feared.
Source: Bloomberg Markets and Finance
Lululemon confirmed that Heidi O'Neill officially began her role as Chief Executive Officer on September 8. She also joined the board of directors, which was expanded to 12 members to accommodate her. This move marks the end of a transition period where the company's finance and international heads were sharing the top job as interim leaders.
Landing a permanent leader is a key step for the company as it tries to fix slowing sales in North America and push further into international markets. O'Neill's arrival provides the stability needed to manage this global expansion, which is now the main engine for the company's growth.
Source: 8-K filing
Piper Sandler lowered its price target from $110 to $80 after the company cut its yearly sales goals. The analyst kept a neutral rating, which means they do not see a clear reason to buy or sell the stock right now. Several other firms have also adjusted their expectations recently. The average analyst target now sits at $98, which is slightly below where the stock currently trades.
Source: Piper Sandler
BMO Capital set a new price target of $70 for the stock on Tuesday. This is significantly lower than the current price of about $99 and the average analyst target of $109. While a target change on its own is routine, this specific call suggests a much deeper drop than most other firms expect. It follows a week where the company lowered its sales outlook for the year, signaling that the slowdown in North American demand may be harder to fix than previously thought.
Source: BMO Capital
Management consistently sets a low bar and clears it by a wide margin, but recent outlook cuts suggest they are finally losing their grip on the slowdown.
| Expectation | |
|---|---|
| EPS | $0.97 |
| Revenue | $2.31B |