You can think of Canadian specialty athletic clothing retailer Lululemon Athletica (Nasdaq: LULU) and the Street's reaction to this quarter, in this way: When you're just walking along the street and have a slight stumble or slip, it's no big deal; nobody notices, nobody cares and you probably don't even break stride. Now, imagine having that same stumble when you're on a wire fifty feet above the ground, with thousands of people staring up at you; the consequences of a mistake are a bit higher.
Some Spots Show Up in the Third Quarter
Lululemon has gotten this far, largely on the basis of promising good growth and then delivering even better results. Not this time, though. Although 16% comps growth would be a level of performance that the CEOs of Gap (NYSE: GPS), American Eagle (NYSE: AEO) or Kohl's (NYSE: KSS) would sell a family member to get, it's not going to satisfy the Lululemon crowd, when the last quarter's performance was 20%. Moreover, sales growth of 31% was quite nice, but the company actually missed the average sell-side guess by about $5 million.
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