Why Lululemon Athletica inc. (NASDAQ:LULU) Is a Buy Right Now
Sports apparel maker Lululemon Athletica inc. (NASDAQ:LULU) reported earnings last night. Here’s the quick and dirty on the quarter: EPS came in at 33-cents including the endlessly discussed see-through pants debacle. Revenue was good, margins were fine, and guidance was decent.
All was basically well until they got to the kicker: CEO Christine Day is stepping down as soon as a replacement is found. The news surprised the Street and sent shares down 15% from all-time highs at $82.50. The stock dipped below $70 a share in early trading.
Estimates are dropping and there’s blood in the Streets. The shares seem expensive and bears are licking their chops. I’m on the other side of the trade planning to add shares anywhere under $70.
That said the product remains the same, the opportunities are huge and untapped, and LULU is replacing a CEO who presided over several operational snafus over the last 12 months. Ms. Day had taken LULU as far as she could in terms of expanding it as a bricks and mortar concept. Now the company needs an operator to execute international expansion plans and improve distribution.
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