Fonkytonks
2021-09-17
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Is Lululemon Stock A Buy Or Sell After Q2 Earnings? Key Risk Is Lower-Than-Expected Profitability<blockquote>第二季度财报公布后，Lululemon股票是买入还是卖出？主要风险是盈利能力低于预期</blockquote>
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Key Risk Is Lower-Than-Expected Profitability<blockquote>第二季度财报公布后，Lululemon股票是买入还是卖出？主要风险是盈利能力低于预期</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1139296336","media":"Seeking Alpha","summary":"Summary\n\nLululemon's share price has done much better than the key benchmark stock indices in the pa","content":"<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Lululemon's share price has done much better than the key benchmark stock indices in the past few months, as a result of better-than-expected financial performance in 1H 2021.</li> <li>LULU achieved strong top line and bottom line growth in Q2 2021 which also beat market expectations, but lower-than-expected profitability for the company going forward is a key downside risk.</li> <li>I see Lululemon stock as Hold after Q2 earnings, as its valuations are expensive, and an earnings miss in the future could de-rate its shares.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4c5831fd8e2c9cd8844c973c0f757a56\" tg-width=\"1536\" tg-height=\"1022\" width=\"100%\" height=\"auto\"><span>jentakespictures/iStock Editorial via Getty Images</span></p><p><blockquote><ul><li>由于2021年上半年的财务业绩好于预期，Lululemon的股价在过去几个月的表现远好于主要基准股指。</li><li>LULU在2021年第二季度实现了强劲的营收和利润增长，也超出了市场预期，但公司未来盈利能力低于预期是一个关键的下行风险。</li><li>我认为Lululemon股票在第二季度财报公布后应持有，因为其估值昂贵，未来盈利未达标可能会降低其股票评级。</li></ul><p class=\"t-img-caption\"><span>jentakespictures/iStock社论来自Getty Images</span></p></blockquote></p><p> <b>Elevator Pitch</b></p><p><blockquote><b>电梯间俯仰</b></blockquote></p><p> I assign a Neutral rating to Lululemon Athletica Inc (LULU).</p><p><blockquote>我对Lululemon Athletica Inc(LULU)给予中性评级。</blockquote></p><p> Lululemon has delivered significant stock price outperformance as compared to the major benchmark stock indices in the last couple of months, and the stock's current valuations are not that appealing following its recent share price run. Larger-than-expected investments in the near future, an unfavorable sales mix with the introduction of new footwear products next year, and potential supply chain disruptions could be a potential drag on LULU's forward earnings.</p><p><blockquote>过去几个月，与主要基准股指相比，Lululemon的股价表现显着优于主要基准股指，而在最近的股价上涨之后，该股目前的估值并没有那么有吸引力。近期超出预期的投资、明年推出新鞋类产品带来的不利销售组合以及潜在的供应链中断可能会拖累LULU的预期收益。</blockquote></p><p> My rating for Lululemon is a Hold or Neutral. On one hand, I am positive on LULU's better-than-expected Q2 results and its long-term growth prospects. On the flip side, LULU's premium valuations and recent share price run have priced in the near-term positives for the company, while there are downside risks relating to its future earnings outlook.</p><p><blockquote>我对Lululemon的评级是持有或中性。一方面，我对LULU好于预期的第二季度业绩及其长期增长前景持乐观态度。另一方面，LULU的溢价估值和近期股价上涨已经反映了该公司近期的积极因素，同时其未来盈利前景也存在下行风险。</blockquote></p><p> <b>Company Description</b></p><p><blockquote><b>公司简介</b></blockquote></p><p> In its press releases, Lululemon Athletica Inc refers to itself as \"a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits\". LULU was established in 1998, and the company's shares were listed on the Nasdaq in 2007.</p><p><blockquote>在其新闻稿中，Lululemon Athletica Inc将自己称为“一家受健康生活方式启发的运动服装公司，提供瑜伽、跑步、训练和大多数其他出汗活动”。露露成立于1998年，公司股票于2007年在纳斯达克上市。</blockquote></p><p> As of August 1, 2021, Lululemon boasted a network of 534 storesthat are located in 17 different markets. LULU generated 69%, 14% and 17%of the company's revenue from the US, Canada and international markets, respectively in the first half of FY 2021. The company-operated stores, the direct-to-consumer business, and others contributed 46%, 43% and 11% of its 1H 2021 sales, respectively. In the company's most recent 10-Q filing, Lululemon Athletica defines the others business segment as \"outlets, temporary locations, sales to wholesale accounts, license and supply arrangements, and MIRROR (home gym business acquired in2020).\"</p><p><blockquote>截至2021年8月1日，Lululemon拥有位于17个不同市场的534家门店网络。2021财年上半年，LULU来自美国、加拿大和国际市场的收入分别占公司收入的69%、14%和17%。公司经营的商店、直接面向消费者的业务和其他业务分别贡献了其2021年上半年销售额的46%、43%和11%。在该公司最新的10-Q文件中，Lululemon Athletica将其他业务部门定义为“门店、临时地点、批发账户销售、许可和供应安排以及MIRROR（2020年收购的家庭健身房业务）”。</blockquote></p><p> <b>Lululemon Stock Price</b></p><p><blockquote><b>露露柠檬股价</b></blockquote></p><p> Lululemon's stock price increased by +20.4% and +32.8% in the year-to-date and past one-year time periods, respectively which tracked the performance of the S&P 500 and the Nasdaq Composite very closely. However, LULU started to outperform the key benchmark stock indices in the last couple of months. In the past six months, Lululemon's share price rose by+33.3%, while the Nasdaq Composite and S&P 500 were only up in the low-teens percentages over the same period. In the last three months, LULU's shares went up by +25.0%, as compared to the +7.7% and +5.5% increases for the Nasdaq Composite and S&P 500, respectively during the same time.</p><p><blockquote>Lululemon的股价今年迄今和过去一年分别上涨了+20.4%和+32.8%，非常密切地跟踪了标普500和纳斯达克综合指数的表现。然而，LULU在过去几个月开始跑赢主要基准股指。在过去的六个月里，Lululemon的股价上涨了33.3%，而同期纳斯达克综合指数和标普500指数的涨幅仅在十几岁左右。在过去三个月中，LULU的股价上涨了+25.0%，而同期纳斯达克综合指数和标普500分别上涨了+7.7%和+5.5%。</blockquote></p><p> LULU's earnings beat for both the first and second quarter of 2021 clearly helped to drive the company's recent strong stock price performance. More significantly, Lululemon Athletica's above-expectations financial performance in the first half of this year implies that the company has structural growth drivers working in its favor, instead of merely being a beneficiary of one-off Work-From-Home or WFH tailwinds during the peak of COVID-19.</p><p><blockquote>LULU 2021年第一季度和第二季度的盈利均好于预期，这显然有助于推动该公司近期股价表现强劲。更重要的是，Lululemon Athletica今年上半年超出预期的财务业绩暗示着该公司拥有有利于其的结构性增长驱动力，而不仅仅是在COVID-19高峰期在家工作或WFH的一次性顺风中受益。</blockquote></p><p> At its recent second-quarter results briefing, Lululemon noted that \"the pandemic drove forward, accelerated some of the guest behaviors that play to the strength of our brand\" which included \"general fitness awareness\", \"being well, living well\" and \"the importance of functional apparel\". The company also emphasized that its \"brand is early innings across product with activities where we focus on\" and \"gaining market share across categories\".</p><p><blockquote>在最近的第二季度业绩发布会上，Lululemon指出，“疫情推动了一些发挥我们品牌优势的客人行为”，其中包括“一般健身意识”、“健康，生活得好”和“功能性服装的重要性”。该公司还强调，其“品牌是我们关注的产品和活动的早期阶段”和“获得跨类别的市场份额”。</blockquote></p><p> Separately, it is critical to examine if whether Lululemon's recent share price outperformance makes it less attractive as a potential investment candidate in terms of valuations.</p><p><blockquote>另外，至关重要的是要考察Lululemon最近的股价表现是否会降低其作为潜在投资候选者的估值吸引力。</blockquote></p><p> <b>Peer Valuation Comparison For LULU</b></p><p><blockquote><b>LULU的同行估值比较</b></blockquote></p><p></p><p> <table> <tbody> <tr> <td><b>Stock</b></td> <td><b>Consensus Current Fiscal Year Normalized P/E Multiple</b></td> <td><b>Consensus Forward One Fiscal Year Normalized P/E Multiple</b></td> <td><b>Consensus Current Fiscal Year Revenue Growth Metric</b></td> <td><b>Consensus Forward One Fiscal Year Revenue Growth Metric</b></td> <td><b>Consensus Current Fiscal Year ROE Metric</b></td> <td><b>Consensus Forward One Fiscal Year ROE Metric</b></td> </tr> <tr> <td><b>Lululemon</b></td> <td>56.0</td> <td>47.1</td> <td>+41.6%</td> <td>+15.0%</td> <td>33.4%</td> <td>34.8%</td> </tr> <tr> <td>Canada Goose Holdings Inc. (GOOS)</td> <td>40.8</td> <td>26.8</td> <td>+21.7%</td> <td>+18.2%</td> <td>18.7%</td> <td>21.3%</td> </tr> <tr> <td>Under Armour, Inc. (UAA)</td> <td>38.7</td> <td>34.0</td> <td>+23.0%</td> <td>+5.3%</td> <td>13.4%</td> <td>14.8%</td> </tr> <tr> <td>NIKE, Inc. (NKE)</td> <td>37.2</td> <td>31.5</td> <td>+12.4%</td> <td>+10.0%</td> <td>47.1%</td> <td>47.6%</td> </tr> <tr> <td>adidas AG (OTCQX:ADDYY) (OTCQX:ADDDF) [ADS:GR]</td> <td>38.8</td> <td>29.0</td> <td>+10.6%</td> <td>+12.1%</td> <td>22.5%</td> <td>25.2%</td> </tr> </tbody> </table> Source: S&P Capital IQ</p><p><blockquote><table><tbody><tr><td><b>股票</b></td><td><b>共识当前财年正常化市盈率倍数</b></td><td><b>共识预期一财年正常化市盈率倍数</b></td><td><b>共识当前财年收入增长指标</b></td><td><b>共识展望一财年收入增长指标</b></td><td><b>共识当前财年ROE指标</b></td><td><b>共识前瞻性一财年ROE指标</b></td></tr><tr><td><b>露露柠檬</b></td><td>56.0</td><td>47.1</td><td>+41.6%</td><td>+15.0%</td><td>33.4%</td><td>34.8%</td></tr><tr><td>加拿大鹅控股公司(GOOS)</td><td>40.8</td><td>26.8</td><td>+21.7%</td><td>+18.2%</td><td>18.7%</td><td>21.3%</td></tr><tr><td>安德玛公司(UAA)</td><td>38.7</td><td>34.0</td><td>+23.0%</td><td>+5.3%</td><td>13.4%</td><td>14.8%</td></tr><tr><td>耐克公司(NKE)</td><td>37.2</td><td>31.5</td><td>+12.4%</td><td>+10.0%</td><td>47.1%</td><td>47.6%</td></tr><tr><td>阿迪达斯股份公司(OTCQX：ADDYY)(OTCQX：ADDDF)[ADS：GR]</td><td>38.8</td><td>29.0</td><td>+10.6%</td><td>+12.1%</td><td>22.5%</td><td>25.2%</td></tr></tbody></table>资料来源：S&P Capital IQ</blockquote></p><p> As per the peer comparison table presented above, Lululemon is valued by the market at a significant premium to the company's listed peers with respect to forward P/E valuation metrics. LULU does boast superior revenue growth prospects as compared to all of its peers, while its forecasted ROEs are higher than the majority of its peers as well. As such, Lululemon does deserve to trade at higher P/E multiples than that of its peers, but the stock's lofty valuations are not very attractive on an absolute basis if one wants to consider it as an investment candidate.</p><p><blockquote>根据上面提供的同行比较表，就远期市盈率估值指标而言，市场对Lululemon的估值明显高于该公司的上市同行。与所有同行相比，LULU确实拥有优越的收入增长前景，同时其预测的净资产收益率也高于大多数同行。因此，Lululemon确实应该以高于同行的市盈率进行交易，但如果人们想将其视为投资候选者，该股的高估值从绝对基础上来看并不是很有吸引力。</blockquote></p><p> <b>LULU Stock Earnings</b></p><p><blockquote><b>LULU股票收益</b></blockquote></p><p> LULU reported its Q2 2021 earnings on September 8, 2021 after trading hours, and the company's stock price jumped by +11% the next day, from $380.85 to $420.71. It is clear that the market is very satisfied with Lululemon's recent quarterly financial performance.</p><p><blockquote>LULU于2021年9月8日盘后公布了2021年第二季度收益，第二天公司股价上涨+11%，从380.85美元上涨至420.71美元。显然，市场对Lululemon最近的季度财务表现非常满意。</blockquote></p><p> LULU's top line expanded by +61% YoY from $903 million in Q2 2020 to $1,451 million in Q2 2021, while its non-GAAP adjusted earnings per share increased by +123% YoY from $0.74 to$1.65over the same period. Notably, Lululemon's revenue and earnings per share were+9% and +39% higher than the market consensus' forecasts, respectively based on S&P Capital IQ data. As I highlighted in the preceding section with reference to the management's comments, athleisure continues to see strong demand, and Lululemon is a key beneficiary as the leading brand in this segment, which explains the company's good quarterly financial results.</p><p><blockquote>LULU的营收同比增长+61%，从2020年第二季度的9.03亿美元增至2021年第二季度的14.51亿美元，而同期其非GAAP调整后每股收益同比增长+123%，从0.74美元增至1.65美元。值得注意的是，根据标准普尔Capital IQ数据，Lululemon的收入和每股收益分别比市场普遍预测高出+9%和+39%。正如我在上一节中参考管理层评论所强调的那样，运动休闲继续看到强劲的需求，而Lululemon作为该细分市场的领先品牌是主要受益者，这解释了该公司良好的季度财务业绩。</blockquote></p><p> Specifically, the excellent performance of Lululemon's international and e-commerce businesses in the recent quarter is noteworthy. LULU's revenue from international markets grew by +49% YoY in Q2 2021, and this was equivalent to a two-year CAGR of +43%. Lululemon highlighted at the company's Q2 earnings call that \"our international business is ahead of the four times growth (revenue target) we put out to be completed by the end of 2023.\"</p><p><blockquote>具体来看，Lululemon国际和电商业务在最近一个季度的优异表现值得关注。2021年第二季度，LULU来自国际市场的收入同比增长+49%，相当于两年复合年增长率+43%。Lululemon在公司第二季度财报看涨期权上强调，“我们的国际业务领先于我们提出的到2023年底完成的四倍增长（收入目标）。”</blockquote></p><p> On the other hand, LULU's e-commerce sales still increased by+4%YoY (adjusted for foreign exchange effects) in Q2 2021, despite an exceptionally high base in Q2 2020 (+157% YoY e-commerce sales growth). This translates to a two-year e-commerce sales CAGR of approximately +66%. Lululemonrevealedthat it is implementing new initiatives to further drive the growth of its e-commerce business, which includes \"expanding our alternative payment methods, improved storytelling, more predictive search and a more seamless checkout.\"</p><p><blockquote>另一方面，尽管2020年第二季度基数异常高（电子商务销售额同比增长157%），但2021年第二季度露露的电子商务销售额仍同比增长+4%（经外汇影响调整）。这意味着两年电子商务销售额复合年增长率约为+66%。Lululemon透露，它正在实施新举措，以进一步推动其电子商务业务的增长，其中包括“扩大我们的替代支付方式、改进故事讲述、更具预测性的搜索和更无缝的结账。”</blockquote></p><p> Moving ahead, Lululemon is guiding for $6.19-$6.26 billion in revenue and $7.38-$7.48 in earnings per share for full-year fiscal 2021. This is aligned with Wall Street analysts' consensus top line and bottom line of $6.233 billion and $7.48, which translate to YoY growth rates of +41.6% and +59.2%, respectively as per S&P Capital IQ data.</p><p><blockquote>展望未来，Lululemon预计2021财年全年收入为6.19-62.6亿美元，每股收益为7.38-7.48美元。这与华尔街分析师一致的营收和净利润分别为62.33亿美元和7.48美元，根据标准普尔Capital IQ数据，同比增长率分别为+41.6%和+59.2%。</blockquote></p><p> However, there is a real risk that the company disappoints on profitability in the coming quarters.</p><p><blockquote>然而，该公司未来几个季度的盈利能力确实存在令人失望的风险。</blockquote></p><p></p><p> Firstly, Lululemon's future investments could be larger than expected. The company guided at its recent results call for FY 2021 SG&A (Selling, General & Administrative) \"deleverage of 10 to 30 basis points versus 2020\" and an increase in capital expenditures this year. LULU attributed this to \"our investment in MIRROR (highlighted in \"Company Description\" section) brand building\", \"MIRROR shop-in-shops\" and \"increased investment in our supply chain, digital capabilities, new store openings and renovations.\" It is not unusual for actual investments to turn out to be greater than what companies budget for.</p><p><blockquote>首先，Lululemon未来的投资可能会超出预期。该公司在最近的业绩中指导2021财年SG&A（销售、一般和行政）看涨期权“与2020年相比去杠杆化10至30个基点”，并增加今年的资本支出。LULU将此归因于“我们对MIRROR（在“公司描述”部分突出显示）品牌建设的投资”、“MIRROR店中店”以及“对我们的供应链、数字化能力、新店开业和装修的投资增加”。实际投资高于公司预算的情况并不罕见。</blockquote></p><p> Secondly, LULU's introduction of footwear products in 2022 could be negative for the company's overall gross profit margin. At its 1Q 2021 earnings call in June 2021, Lululemon mentioned that \"we are bringing footwear next year.\" As a new product line which will begin with relatively lower volume, footwear products are likely to have lower gross profit margins than LULU's existing core products. In other words, Lululemon's sales mix could be less favorable next year, and this could translate to lower gross margins for the company as a whole.</p><p><blockquote>其次，露露在2022年推出鞋类产品可能会对公司整体毛利率产生负面影响。在2021年6月举行的2021年第一季度财报看涨期权上，Lululemon提到“我们明年将推出鞋类产品”。作为一个新产品线，开始时的销量相对较低，鞋类产品的毛利率可能低于露露现有的核心产品。换句话说，Lululemon明年的销售组合可能会不太有利，这可能会导致整个公司的毛利率下降。</blockquote></p><p> Thirdly, lock-downs in Vietnam relating to COVID-19 could have an adverse impact on the company's business operations. Lululemon acknowledged at its Q2 2021 results briefing that the Vietnam production disruption \"is currently impacting approximately 20% of our second half inventory\", with the country accounting for \"30% of our finished goods.\" A September 13, 2021 <i>Seeking Alpha</i> news article quoted research from <i>BTIG</i> which mentioned that there are \"supply risks in the apparel and footwear sector as the negative impact of Vietnam factory closures becomes clearer.\" LULU's current full-year guidance is based onthe assumptionthat Southern Vietnam commences its re-opening process this month, and if that does not happen, Lululemon's financial numbers in the subsequent quarters could potentially come in below expectations.</p><p><blockquote>第三，越南与COVID-19相关的封锁可能会对公司的业务运营产生不利影响。Lululemon在2021年第二季度业绩简报会上承认，越南生产中断“目前影响了我们下半年约20%的库存”，该国占“我们成品的30%”。a 2021年9月13日<i>寻求阿尔法</i>新闻文章引用了来自<i>BTIG</i>其中提到，“随着越南工厂关闭的负面影响变得更加明显，服装和鞋类行业存在供应风险”。LULU目前的全年指引是基于越南南部本月开始重新开放进程的假设，如果这种情况没有发生，Lululemon随后几个季度的财务数据可能会低于预期。</blockquote></p><p> <b>Is LULU Stock A Buy, Sell, Or Hold?</b></p><p><blockquote><b>LULU股票是买入、卖出还是持有？</b></blockquote></p><p> LULU stock is a Hold based on my analysis.</p><p><blockquote>根据我的分析，LULU股票值得持有。</blockquote></p><p> I fear that Lululemon could suffer from a valuation de-rating, assuming that the company's future quarterly earnings fall short of market expectations as a result of the various factors that I highlighted in the previous section. That said, I do acknowledge that LULU is the market leader in athleisure with significantmarket share, and its medium-term growth prospects are excellent, especially for the international and e-commerce segments. Considering both the positives and negatives associated with the stock, my opinion is that a Hold rating is fair for Lululemon.</p><p><blockquote>我担心Lululemon可能会遭受估值下调，假设该公司未来的季度收益由于我在上一节中强调的各种因素而低于市场预期。也就是说，我确实承认LULU是运动休闲领域的市场领导者，拥有巨大的市场份额，其中期增长前景非常好，尤其是在国际和电子商务领域。考虑到与该股票相关的积极和消极因素，我认为Lululemon的持有评级是公平的。</blockquote></p><p> LULU's key risks are actual investments exceeding its original budget, a failure to ramp up sales of its new footwear products next year to achieve economies of scale, and prolonged lock-downs in Vietnam which bring greater-than-expected disruptions for the company.</p><p><blockquote>LULU面临的主要风险是实际投资超出了最初的预算，明年未能提高新鞋类产品的销量以实现规模经济，以及越南的长期封锁给公司带来了超出预期的干扰。</blockquote></p><p></p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Lululemon Stock A Buy Or Sell After Q2 Earnings? Key Risk Is Lower-Than-Expected Profitability<blockquote>第二季度财报公布后，Lululemon股票是买入还是卖出？主要风险是盈利能力低于预期</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Lululemon Stock A Buy Or Sell After Q2 Earnings? Key Risk Is Lower-Than-Expected Profitability<blockquote>第二季度财报公布后，Lululemon股票是买入还是卖出？主要风险是盈利能力低于预期</blockquote>\n</h2>\n<h4 class=\"meta\">\n<p class=\"head\">\n<strong class=\"h-name small\">Seeking Alpha</strong><span class=\"h-time small\">2021-09-17 17:36</span>\n</p>\n</h4>\n</header>\n<article>\n<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Lululemon's share price has done much better than the key benchmark stock indices in the past few months, as a result of better-than-expected financial performance in 1H 2021.</li> <li>LULU achieved strong top line and bottom line growth in Q2 2021 which also beat market expectations, but lower-than-expected profitability for the company going forward is a key downside risk.</li> <li>I see Lululemon stock as Hold after Q2 earnings, as its valuations are expensive, and an earnings miss in the future could de-rate its shares.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4c5831fd8e2c9cd8844c973c0f757a56\" tg-width=\"1536\" tg-height=\"1022\" width=\"100%\" height=\"auto\"><span>jentakespictures/iStock Editorial via Getty Images</span></p><p><blockquote><ul><li>由于2021年上半年的财务业绩好于预期，Lululemon的股价在过去几个月的表现远好于主要基准股指。</li><li>LULU在2021年第二季度实现了强劲的营收和利润增长，也超出了市场预期，但公司未来盈利能力低于预期是一个关键的下行风险。</li><li>我认为Lululemon股票在第二季度财报公布后应持有，因为其估值昂贵，未来盈利未达标可能会降低其股票评级。</li></ul><p class=\"t-img-caption\"><span>jentakespictures/iStock社论来自Getty Images</span></p></blockquote></p><p> <b>Elevator Pitch</b></p><p><blockquote><b>电梯间俯仰</b></blockquote></p><p> I assign a Neutral rating to Lululemon Athletica Inc (LULU).</p><p><blockquote>我对Lululemon Athletica Inc(LULU)给予中性评级。</blockquote></p><p> Lululemon has delivered significant stock price outperformance as compared to the major benchmark stock indices in the last couple of months, and the stock's current valuations are not that appealing following its recent share price run. Larger-than-expected investments in the near future, an unfavorable sales mix with the introduction of new footwear products next year, and potential supply chain disruptions could be a potential drag on LULU's forward earnings.</p><p><blockquote>过去几个月，与主要基准股指相比，Lululemon的股价表现显着优于主要基准股指，而在最近的股价上涨之后，该股目前的估值并没有那么有吸引力。近期超出预期的投资、明年推出新鞋类产品带来的不利销售组合以及潜在的供应链中断可能会拖累LULU的预期收益。</blockquote></p><p> My rating for Lululemon is a Hold or Neutral. On one hand, I am positive on LULU's better-than-expected Q2 results and its long-term growth prospects. On the flip side, LULU's premium valuations and recent share price run have priced in the near-term positives for the company, while there are downside risks relating to its future earnings outlook.</p><p><blockquote>我对Lululemon的评级是持有或中性。一方面，我对LULU好于预期的第二季度业绩及其长期增长前景持乐观态度。另一方面，LULU的溢价估值和近期股价上涨已经反映了该公司近期的积极因素，同时其未来盈利前景也存在下行风险。</blockquote></p><p> <b>Company Description</b></p><p><blockquote><b>公司简介</b></blockquote></p><p> In its press releases, Lululemon Athletica Inc refers to itself as \"a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits\". LULU was established in 1998, and the company's shares were listed on the Nasdaq in 2007.</p><p><blockquote>在其新闻稿中，Lululemon Athletica Inc将自己称为“一家受健康生活方式启发的运动服装公司，提供瑜伽、跑步、训练和大多数其他出汗活动”。露露成立于1998年，公司股票于2007年在纳斯达克上市。</blockquote></p><p> As of August 1, 2021, Lululemon boasted a network of 534 storesthat are located in 17 different markets. LULU generated 69%, 14% and 17%of the company's revenue from the US, Canada and international markets, respectively in the first half of FY 2021. The company-operated stores, the direct-to-consumer business, and others contributed 46%, 43% and 11% of its 1H 2021 sales, respectively. In the company's most recent 10-Q filing, Lululemon Athletica defines the others business segment as \"outlets, temporary locations, sales to wholesale accounts, license and supply arrangements, and MIRROR (home gym business acquired in2020).\"</p><p><blockquote>截至2021年8月1日，Lululemon拥有位于17个不同市场的534家门店网络。2021财年上半年，LULU来自美国、加拿大和国际市场的收入分别占公司收入的69%、14%和17%。公司经营的商店、直接面向消费者的业务和其他业务分别贡献了其2021年上半年销售额的46%、43%和11%。在该公司最新的10-Q文件中，Lululemon Athletica将其他业务部门定义为“门店、临时地点、批发账户销售、许可和供应安排以及MIRROR（2020年收购的家庭健身房业务）”。</blockquote></p><p> <b>Lululemon Stock Price</b></p><p><blockquote><b>露露柠檬股价</b></blockquote></p><p> Lululemon's stock price increased by +20.4% and +32.8% in the year-to-date and past one-year time periods, respectively which tracked the performance of the S&P 500 and the Nasdaq Composite very closely. However, LULU started to outperform the key benchmark stock indices in the last couple of months. In the past six months, Lululemon's share price rose by+33.3%, while the Nasdaq Composite and S&P 500 were only up in the low-teens percentages over the same period. In the last three months, LULU's shares went up by +25.0%, as compared to the +7.7% and +5.5% increases for the Nasdaq Composite and S&P 500, respectively during the same time.</p><p><blockquote>Lululemon的股价今年迄今和过去一年分别上涨了+20.4%和+32.8%，非常密切地跟踪了标普500和纳斯达克综合指数的表现。然而，LULU在过去几个月开始跑赢主要基准股指。在过去的六个月里，Lululemon的股价上涨了33.3%，而同期纳斯达克综合指数和标普500指数的涨幅仅在十几岁左右。在过去三个月中，LULU的股价上涨了+25.0%，而同期纳斯达克综合指数和标普500分别上涨了+7.7%和+5.5%。</blockquote></p><p> LULU's earnings beat for both the first and second quarter of 2021 clearly helped to drive the company's recent strong stock price performance. More significantly, Lululemon Athletica's above-expectations financial performance in the first half of this year implies that the company has structural growth drivers working in its favor, instead of merely being a beneficiary of one-off Work-From-Home or WFH tailwinds during the peak of COVID-19.</p><p><blockquote>LULU 2021年第一季度和第二季度的盈利均好于预期，这显然有助于推动该公司近期股价表现强劲。更重要的是，Lululemon Athletica今年上半年超出预期的财务业绩暗示着该公司拥有有利于其的结构性增长驱动力，而不仅仅是在COVID-19高峰期在家工作或WFH的一次性顺风中受益。</blockquote></p><p> At its recent second-quarter results briefing, Lululemon noted that \"the pandemic drove forward, accelerated some of the guest behaviors that play to the strength of our brand\" which included \"general fitness awareness\", \"being well, living well\" and \"the importance of functional apparel\". The company also emphasized that its \"brand is early innings across product with activities where we focus on\" and \"gaining market share across categories\".</p><p><blockquote>在最近的第二季度业绩发布会上，Lululemon指出，“疫情推动了一些发挥我们品牌优势的客人行为”，其中包括“一般健身意识”、“健康，生活得好”和“功能性服装的重要性”。该公司还强调，其“品牌是我们关注的产品和活动的早期阶段”和“获得跨类别的市场份额”。</blockquote></p><p> Separately, it is critical to examine if whether Lululemon's recent share price outperformance makes it less attractive as a potential investment candidate in terms of valuations.</p><p><blockquote>另外，至关重要的是要考察Lululemon最近的股价表现是否会降低其作为潜在投资候选者的估值吸引力。</blockquote></p><p> <b>Peer Valuation Comparison For LULU</b></p><p><blockquote><b>LULU的同行估值比较</b></blockquote></p><p></p><p> <table> <tbody> <tr> <td><b>Stock</b></td> <td><b>Consensus Current Fiscal Year Normalized P/E Multiple</b></td> <td><b>Consensus Forward One Fiscal Year Normalized P/E Multiple</b></td> <td><b>Consensus Current Fiscal Year Revenue Growth Metric</b></td> <td><b>Consensus Forward One Fiscal Year Revenue Growth Metric</b></td> <td><b>Consensus Current Fiscal Year ROE Metric</b></td> <td><b>Consensus Forward One Fiscal Year ROE Metric</b></td> </tr> <tr> <td><b>Lululemon</b></td> <td>56.0</td> <td>47.1</td> <td>+41.6%</td> <td>+15.0%</td> <td>33.4%</td> <td>34.8%</td> </tr> <tr> <td>Canada Goose Holdings Inc. (GOOS)</td> <td>40.8</td> <td>26.8</td> <td>+21.7%</td> <td>+18.2%</td> <td>18.7%</td> <td>21.3%</td> </tr> <tr> <td>Under Armour, Inc. (UAA)</td> <td>38.7</td> <td>34.0</td> <td>+23.0%</td> <td>+5.3%</td> <td>13.4%</td> <td>14.8%</td> </tr> <tr> <td>NIKE, Inc. (NKE)</td> <td>37.2</td> <td>31.5</td> <td>+12.4%</td> <td>+10.0%</td> <td>47.1%</td> <td>47.6%</td> </tr> <tr> <td>adidas AG (OTCQX:ADDYY) (OTCQX:ADDDF) [ADS:GR]</td> <td>38.8</td> <td>29.0</td> <td>+10.6%</td> <td>+12.1%</td> <td>22.5%</td> <td>25.2%</td> </tr> </tbody> </table> Source: S&P Capital IQ</p><p><blockquote><table><tbody><tr><td><b>股票</b></td><td><b>共识当前财年正常化市盈率倍数</b></td><td><b>共识预期一财年正常化市盈率倍数</b></td><td><b>共识当前财年收入增长指标</b></td><td><b>共识展望一财年收入增长指标</b></td><td><b>共识当前财年ROE指标</b></td><td><b>共识前瞻性一财年ROE指标</b></td></tr><tr><td><b>露露柠檬</b></td><td>56.0</td><td>47.1</td><td>+41.6%</td><td>+15.0%</td><td>33.4%</td><td>34.8%</td></tr><tr><td>加拿大鹅控股公司(GOOS)</td><td>40.8</td><td>26.8</td><td>+21.7%</td><td>+18.2%</td><td>18.7%</td><td>21.3%</td></tr><tr><td>安德玛公司(UAA)</td><td>38.7</td><td>34.0</td><td>+23.0%</td><td>+5.3%</td><td>13.4%</td><td>14.8%</td></tr><tr><td>耐克公司(NKE)</td><td>37.2</td><td>31.5</td><td>+12.4%</td><td>+10.0%</td><td>47.1%</td><td>47.6%</td></tr><tr><td>阿迪达斯股份公司(OTCQX：ADDYY)(OTCQX：ADDDF)[ADS：GR]</td><td>38.8</td><td>29.0</td><td>+10.6%</td><td>+12.1%</td><td>22.5%</td><td>25.2%</td></tr></tbody></table>资料来源：S&P Capital IQ</blockquote></p><p> As per the peer comparison table presented above, Lululemon is valued by the market at a significant premium to the company's listed peers with respect to forward P/E valuation metrics. LULU does boast superior revenue growth prospects as compared to all of its peers, while its forecasted ROEs are higher than the majority of its peers as well. As such, Lululemon does deserve to trade at higher P/E multiples than that of its peers, but the stock's lofty valuations are not very attractive on an absolute basis if one wants to consider it as an investment candidate.</p><p><blockquote>根据上面提供的同行比较表，就远期市盈率估值指标而言，市场对Lululemon的估值明显高于该公司的上市同行。与所有同行相比，LULU确实拥有优越的收入增长前景，同时其预测的净资产收益率也高于大多数同行。因此，Lululemon确实应该以高于同行的市盈率进行交易，但如果人们想将其视为投资候选者，该股的高估值从绝对基础上来看并不是很有吸引力。</blockquote></p><p> <b>LULU Stock Earnings</b></p><p><blockquote><b>LULU股票收益</b></blockquote></p><p> LULU reported its Q2 2021 earnings on September 8, 2021 after trading hours, and the company's stock price jumped by +11% the next day, from $380.85 to $420.71. It is clear that the market is very satisfied with Lululemon's recent quarterly financial performance.</p><p><blockquote>LULU于2021年9月8日盘后公布了2021年第二季度收益，第二天公司股价上涨+11%，从380.85美元上涨至420.71美元。显然，市场对Lululemon最近的季度财务表现非常满意。</blockquote></p><p> LULU's top line expanded by +61% YoY from $903 million in Q2 2020 to $1,451 million in Q2 2021, while its non-GAAP adjusted earnings per share increased by +123% YoY from $0.74 to$1.65over the same period. Notably, Lululemon's revenue and earnings per share were+9% and +39% higher than the market consensus' forecasts, respectively based on S&P Capital IQ data. As I highlighted in the preceding section with reference to the management's comments, athleisure continues to see strong demand, and Lululemon is a key beneficiary as the leading brand in this segment, which explains the company's good quarterly financial results.</p><p><blockquote>LULU的营收同比增长+61%，从2020年第二季度的9.03亿美元增至2021年第二季度的14.51亿美元，而同期其非GAAP调整后每股收益同比增长+123%，从0.74美元增至1.65美元。值得注意的是，根据标准普尔Capital IQ数据，Lululemon的收入和每股收益分别比市场普遍预测高出+9%和+39%。正如我在上一节中参考管理层评论所强调的那样，运动休闲继续看到强劲的需求，而Lululemon作为该细分市场的领先品牌是主要受益者，这解释了该公司良好的季度财务业绩。</blockquote></p><p> Specifically, the excellent performance of Lululemon's international and e-commerce businesses in the recent quarter is noteworthy. LULU's revenue from international markets grew by +49% YoY in Q2 2021, and this was equivalent to a two-year CAGR of +43%. Lululemon highlighted at the company's Q2 earnings call that \"our international business is ahead of the four times growth (revenue target) we put out to be completed by the end of 2023.\"</p><p><blockquote>具体来看，Lululemon国际和电商业务在最近一个季度的优异表现值得关注。2021年第二季度，LULU来自国际市场的收入同比增长+49%，相当于两年复合年增长率+43%。Lululemon在公司第二季度财报看涨期权上强调，“我们的国际业务领先于我们提出的到2023年底完成的四倍增长（收入目标）。”</blockquote></p><p> On the other hand, LULU's e-commerce sales still increased by+4%YoY (adjusted for foreign exchange effects) in Q2 2021, despite an exceptionally high base in Q2 2020 (+157% YoY e-commerce sales growth). This translates to a two-year e-commerce sales CAGR of approximately +66%. Lululemonrevealedthat it is implementing new initiatives to further drive the growth of its e-commerce business, which includes \"expanding our alternative payment methods, improved storytelling, more predictive search and a more seamless checkout.\"</p><p><blockquote>另一方面，尽管2020年第二季度基数异常高（电子商务销售额同比增长157%），但2021年第二季度露露的电子商务销售额仍同比增长+4%（经外汇影响调整）。这意味着两年电子商务销售额复合年增长率约为+66%。Lululemon透露，它正在实施新举措，以进一步推动其电子商务业务的增长，其中包括“扩大我们的替代支付方式、改进故事讲述、更具预测性的搜索和更无缝的结账。”</blockquote></p><p> Moving ahead, Lululemon is guiding for $6.19-$6.26 billion in revenue and $7.38-$7.48 in earnings per share for full-year fiscal 2021. This is aligned with Wall Street analysts' consensus top line and bottom line of $6.233 billion and $7.48, which translate to YoY growth rates of +41.6% and +59.2%, respectively as per S&P Capital IQ data.</p><p><blockquote>展望未来，Lululemon预计2021财年全年收入为6.19-62.6亿美元，每股收益为7.38-7.48美元。这与华尔街分析师一致的营收和净利润分别为62.33亿美元和7.48美元，根据标准普尔Capital IQ数据，同比增长率分别为+41.6%和+59.2%。</blockquote></p><p> However, there is a real risk that the company disappoints on profitability in the coming quarters.</p><p><blockquote>然而，该公司未来几个季度的盈利能力确实存在令人失望的风险。</blockquote></p><p></p><p> Firstly, Lululemon's future investments could be larger than expected. The company guided at its recent results call for FY 2021 SG&A (Selling, General & Administrative) \"deleverage of 10 to 30 basis points versus 2020\" and an increase in capital expenditures this year. LULU attributed this to \"our investment in MIRROR (highlighted in \"Company Description\" section) brand building\", \"MIRROR shop-in-shops\" and \"increased investment in our supply chain, digital capabilities, new store openings and renovations.\" It is not unusual for actual investments to turn out to be greater than what companies budget for.</p><p><blockquote>首先，Lululemon未来的投资可能会超出预期。该公司在最近的业绩中指导2021财年SG&A（销售、一般和行政）看涨期权“与2020年相比去杠杆化10至30个基点”，并增加今年的资本支出。LULU将此归因于“我们对MIRROR（在“公司描述”部分突出显示）品牌建设的投资”、“MIRROR店中店”以及“对我们的供应链、数字化能力、新店开业和装修的投资增加”。实际投资高于公司预算的情况并不罕见。</blockquote></p><p> Secondly, LULU's introduction of footwear products in 2022 could be negative for the company's overall gross profit margin. At its 1Q 2021 earnings call in June 2021, Lululemon mentioned that \"we are bringing footwear next year.\" As a new product line which will begin with relatively lower volume, footwear products are likely to have lower gross profit margins than LULU's existing core products. In other words, Lululemon's sales mix could be less favorable next year, and this could translate to lower gross margins for the company as a whole.</p><p><blockquote>其次，露露在2022年推出鞋类产品可能会对公司整体毛利率产生负面影响。在2021年6月举行的2021年第一季度财报看涨期权上，Lululemon提到“我们明年将推出鞋类产品”。作为一个新产品线，开始时的销量相对较低，鞋类产品的毛利率可能低于露露现有的核心产品。换句话说，Lululemon明年的销售组合可能会不太有利，这可能会导致整个公司的毛利率下降。</blockquote></p><p> Thirdly, lock-downs in Vietnam relating to COVID-19 could have an adverse impact on the company's business operations. Lululemon acknowledged at its Q2 2021 results briefing that the Vietnam production disruption \"is currently impacting approximately 20% of our second half inventory\", with the country accounting for \"30% of our finished goods.\" A September 13, 2021 <i>Seeking Alpha</i> news article quoted research from <i>BTIG</i> which mentioned that there are \"supply risks in the apparel and footwear sector as the negative impact of Vietnam factory closures becomes clearer.\" LULU's current full-year guidance is based onthe assumptionthat Southern Vietnam commences its re-opening process this month, and if that does not happen, Lululemon's financial numbers in the subsequent quarters could potentially come in below expectations.</p><p><blockquote>第三，越南与COVID-19相关的封锁可能会对公司的业务运营产生不利影响。Lululemon在2021年第二季度业绩简报会上承认，越南生产中断“目前影响了我们下半年约20%的库存”，该国占“我们成品的30%”。a 2021年9月13日<i>寻求阿尔法</i>新闻文章引用了来自<i>BTIG</i>其中提到，“随着越南工厂关闭的负面影响变得更加明显，服装和鞋类行业存在供应风险”。LULU目前的全年指引是基于越南南部本月开始重新开放进程的假设，如果这种情况没有发生，Lululemon随后几个季度的财务数据可能会低于预期。</blockquote></p><p> <b>Is LULU Stock A Buy, Sell, Or Hold?</b></p><p><blockquote><b>LULU股票是买入、卖出还是持有？</b></blockquote></p><p> LULU stock is a Hold based on my analysis.</p><p><blockquote>根据我的分析，LULU股票值得持有。</blockquote></p><p> I fear that Lululemon could suffer from a valuation de-rating, assuming that the company's future quarterly earnings fall short of market expectations as a result of the various factors that I highlighted in the previous section. That said, I do acknowledge that LULU is the market leader in athleisure with significantmarket share, and its medium-term growth prospects are excellent, especially for the international and e-commerce segments. Considering both the positives and negatives associated with the stock, my opinion is that a Hold rating is fair for Lululemon.</p><p><blockquote>我担心Lululemon可能会遭受估值下调，假设该公司未来的季度收益由于我在上一节中强调的各种因素而低于市场预期。也就是说，我确实承认LULU是运动休闲领域的市场领导者，拥有巨大的市场份额，其中期增长前景非常好，尤其是在国际和电子商务领域。考虑到与该股票相关的积极和消极因素，我认为Lululemon的持有评级是公平的。</blockquote></p><p> LULU's key risks are actual investments exceeding its original budget, a failure to ramp up sales of its new footwear products next year to achieve economies of scale, and prolonged lock-downs in Vietnam which bring greater-than-expected disruptions for the company.</p><p><blockquote>LULU面临的主要风险是实际投资超出了最初的预算，明年未能提高新鞋类产品的销量以实现规模经济，以及越南的长期封锁给公司带来了超出预期的干扰。</blockquote></p><p></p>\n<div class=\"bt-text\">\n\n\n<p> 来源：<a href=\"https://seekingalpha.com/article/4455585-lululemon-stock-buy-sell-q2-earnings\">Seeking Alpha</a></p>\n<p>为提升您的阅读体验，我们对本页面进行了排版优化</p>\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LULU":"lululemon athletica"},"source_url":"https://seekingalpha.com/article/4455585-lululemon-stock-buy-sell-q2-earnings","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1139296336","content_text":"Summary\n\nLululemon's share price has done much better than the key benchmark stock indices in the past few months, as a result of better-than-expected financial performance in 1H 2021.\nLULU achieved strong top line and bottom line growth in Q2 2021 which also beat market expectations, but lower-than-expected profitability for the company going forward is a key downside risk.\nI see Lululemon stock as Hold after Q2 earnings, as its valuations are expensive, and an earnings miss in the future could de-rate its shares.\n\njentakespictures/iStock Editorial via Getty Images\nElevator Pitch\nI assign a Neutral rating to Lululemon Athletica Inc (LULU).\nLululemon has delivered significant stock price outperformance as compared to the major benchmark stock indices in the last couple of months, and the stock's current valuations are not that appealing following its recent share price run. Larger-than-expected investments in the near future, an unfavorable sales mix with the introduction of new footwear products next year, and potential supply chain disruptions could be a potential drag on LULU's forward earnings.\nMy rating for Lululemon is a Hold or Neutral. On one hand, I am positive on LULU's better-than-expected Q2 results and its long-term growth prospects. On the flip side, LULU's premium valuations and recent share price run have priced in the near-term positives for the company, while there are downside risks relating to its future earnings outlook.\nCompany Description\nIn its press releases, Lululemon Athletica Inc refers to itself as \"a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits\". LULU was established in 1998, and the company's shares were listed on the Nasdaq in 2007.\nAs of August 1, 2021, Lululemon boasted a network of 534 storesthat are located in 17 different markets. LULU generated 69%, 14% and 17%of the company's revenue from the US, Canada and international markets, respectively in the first half of FY 2021. The company-operated stores, the direct-to-consumer business, and others contributed 46%, 43% and 11% of its 1H 2021 sales, respectively. In the company's most recent 10-Q filing, Lululemon Athletica defines the others business segment as \"outlets, temporary locations, sales to wholesale accounts, license and supply arrangements, and MIRROR (home gym business acquired in2020).\"\nLululemon Stock Price\nLululemon's stock price increased by +20.4% and +32.8% in the year-to-date and past one-year time periods, respectively which tracked the performance of the S&P 500 and the Nasdaq Composite very closely. However, LULU started to outperform the key benchmark stock indices in the last couple of months. In the past six months, Lululemon's share price rose by+33.3%, while the Nasdaq Composite and S&P 500 were only up in the low-teens percentages over the same period. In the last three months, LULU's shares went up by +25.0%, as compared to the +7.7% and +5.5% increases for the Nasdaq Composite and S&P 500, respectively during the same time.\nLULU's earnings beat for both the first and second quarter of 2021 clearly helped to drive the company's recent strong stock price performance. More significantly, Lululemon Athletica's above-expectations financial performance in the first half of this year implies that the company has structural growth drivers working in its favor, instead of merely being a beneficiary of one-off Work-From-Home or WFH tailwinds during the peak of COVID-19.\nAt its recent second-quarter results briefing, Lululemon noted that \"the pandemic drove forward, accelerated some of the guest behaviors that play to the strength of our brand\" which included \"general fitness awareness\", \"being well, living well\" and \"the importance of functional apparel\". The company also emphasized that its \"brand is early innings across product with activities where we focus on\" and \"gaining market share across categories\".\nSeparately, it is critical to examine if whether Lululemon's recent share price outperformance makes it less attractive as a potential investment candidate in terms of valuations.\nPeer Valuation Comparison For LULU\n\n\n\nStock\nConsensus Current Fiscal Year Normalized P/E Multiple\nConsensus Forward One Fiscal Year Normalized P/E Multiple\nConsensus Current Fiscal Year Revenue Growth Metric\nConsensus Forward One Fiscal Year Revenue Growth Metric\nConsensus Current Fiscal Year ROE Metric\nConsensus Forward One Fiscal Year ROE Metric\n\n\nLululemon\n56.0\n47.1\n+41.6%\n+15.0%\n33.4%\n34.8%\n\n\nCanada Goose Holdings Inc. (GOOS)\n40.8\n26.8\n+21.7%\n+18.2%\n18.7%\n21.3%\n\n\nUnder Armour, Inc. (UAA)\n38.7\n34.0\n+23.0%\n+5.3%\n13.4%\n14.8%\n\n\nNIKE, Inc. (NKE)\n37.2\n31.5\n+12.4%\n+10.0%\n47.1%\n47.6%\n\n\nadidas AG (OTCQX:ADDYY) (OTCQX:ADDDF) [ADS:GR]\n38.8\n29.0\n+10.6%\n+12.1%\n22.5%\n25.2%\n\n\n\nSource: S&P Capital IQ\nAs per the peer comparison table presented above, Lululemon is valued by the market at a significant premium to the company's listed peers with respect to forward P/E valuation metrics. LULU does boast superior revenue growth prospects as compared to all of its peers, while its forecasted ROEs are higher than the majority of its peers as well. As such, Lululemon does deserve to trade at higher P/E multiples than that of its peers, but the stock's lofty valuations are not very attractive on an absolute basis if one wants to consider it as an investment candidate.\nLULU Stock Earnings\nLULU reported its Q2 2021 earnings on September 8, 2021 after trading hours, and the company's stock price jumped by +11% the next day, from $380.85 to $420.71. It is clear that the market is very satisfied with Lululemon's recent quarterly financial performance.\nLULU's top line expanded by +61% YoY from $903 million in Q2 2020 to $1,451 million in Q2 2021, while its non-GAAP adjusted earnings per share increased by +123% YoY from $0.74 to$1.65over the same period. Notably, Lululemon's revenue and earnings per share were+9% and +39% higher than the market consensus' forecasts, respectively based on S&P Capital IQ data. As I highlighted in the preceding section with reference to the management's comments, athleisure continues to see strong demand, and Lululemon is a key beneficiary as the leading brand in this segment, which explains the company's good quarterly financial results.\nSpecifically, the excellent performance of Lululemon's international and e-commerce businesses in the recent quarter is noteworthy. LULU's revenue from international markets grew by +49% YoY in Q2 2021, and this was equivalent to a two-year CAGR of +43%. Lululemon highlighted at the company's Q2 earnings call that \"our international business is ahead of the four times growth (revenue target) we put out to be completed by the end of 2023.\"\nOn the other hand, LULU's e-commerce sales still increased by+4%YoY (adjusted for foreign exchange effects) in Q2 2021, despite an exceptionally high base in Q2 2020 (+157% YoY e-commerce sales growth). This translates to a two-year e-commerce sales CAGR of approximately +66%. Lululemonrevealedthat it is implementing new initiatives to further drive the growth of its e-commerce business, which includes \"expanding our alternative payment methods, improved storytelling, more predictive search and a more seamless checkout.\"\nMoving ahead, Lululemon is guiding for $6.19-$6.26 billion in revenue and $7.38-$7.48 in earnings per share for full-year fiscal 2021. This is aligned with Wall Street analysts' consensus top line and bottom line of $6.233 billion and $7.48, which translate to YoY growth rates of +41.6% and +59.2%, respectively as per S&P Capital IQ data.\nHowever, there is a real risk that the company disappoints on profitability in the coming quarters.\nFirstly, Lululemon's future investments could be larger than expected. The company guided at its recent results call for FY 2021 SG&A (Selling, General & Administrative) \"deleverage of 10 to 30 basis points versus 2020\" and an increase in capital expenditures this year. LULU attributed this to \"our investment in MIRROR (highlighted in \"Company Description\" section) brand building\", \"MIRROR shop-in-shops\" and \"increased investment in our supply chain, digital capabilities, new store openings and renovations.\" It is not unusual for actual investments to turn out to be greater than what companies budget for.\nSecondly, LULU's introduction of footwear products in 2022 could be negative for the company's overall gross profit margin. At its 1Q 2021 earnings call in June 2021, Lululemon mentioned that \"we are bringing footwear next year.\" As a new product line which will begin with relatively lower volume, footwear products are likely to have lower gross profit margins than LULU's existing core products. In other words, Lululemon's sales mix could be less favorable next year, and this could translate to lower gross margins for the company as a whole.\nThirdly, lock-downs in Vietnam relating to COVID-19 could have an adverse impact on the company's business operations. Lululemon acknowledged at its Q2 2021 results briefing that the Vietnam production disruption \"is currently impacting approximately 20% of our second half inventory\", with the country accounting for \"30% of our finished goods.\" A September 13, 2021 Seeking Alpha news article quoted research from BTIG which mentioned that there are \"supply risks in the apparel and footwear sector as the negative impact of Vietnam factory closures becomes clearer.\" LULU's current full-year guidance is based onthe assumptionthat Southern Vietnam commences its re-opening process this month, and if that does not happen, Lululemon's financial numbers in the subsequent quarters could potentially come in below expectations.\nIs LULU Stock A Buy, Sell, Or Hold?\nLULU stock is a Hold based on my analysis.\nI fear that Lululemon could suffer from a valuation de-rating, assuming that the company's future quarterly earnings fall short of market expectations as a result of the various factors that I highlighted in the previous section. That said, I do acknowledge that LULU is the market leader in athleisure with significantmarket share, and its medium-term growth prospects are excellent, especially for the international and e-commerce segments. Considering both the positives and negatives associated with the stock, my opinion is that a Hold rating is fair for Lululemon.\nLULU's key risks are actual investments exceeding its original budget, a failure to ramp up sales of its new footwear products next year to achieve economies of scale, and prolonged lock-downs in Vietnam which bring greater-than-expected disruptions for the company.","news_type":1,"symbols_score_info":{"LULU":0.9}},"isVote":1,"tweetType":1,"viewCount":3155,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":3,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/884814380"}
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