Fourth-quarter profits are still coming in on target and sales are rising, but some analysts are starting to wonder about brand saturation.
Simeon Siegel, a stock analyst at BMO, said stock multiples are often tied to revenues, but that the top line can be a lagging indicator. “Lululemon’s clearly a strong brand with a strong Wall Street fan base — count us in it — but, we fear brand saturation questions are becoming hard to ignore,” he said. conference this week and might offer some more color on results.
“The question is, did Lululemon take their inventory medicine, weighing on gross margins, now entering fiscal year 2023 clean?” Siegel said. “That would be the silver lining of the release. If not, and inventory remains elevated, it will be hard to ignore the margin questions we’ve been asking over the last several quarters.”
Calvin McDonald, Lululemon’s chief executive officer, said he was “pleased” with the companies’ top-line growth and momentum in a “dynamic macro-backdrop.” “In [the fourth quarter], traffic remains strong across both physical and digital channels, and we anticipate delivering another quarter of solid earnings growth consistent with our updated EPS forecast,” McDonald said. “2022 has been a strong year for Lululemon, and we remain focused on the significant opportunities ahead as we continue to
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