Lululemon´s shares up 50% in 2012

Thursday, 07 June 2012

U.S. stocks retained Wednesday's rally, but came off session highs, after the release of the Federal Reserve's Beige Book, which found the US economy still growing at a moderate pace. Following the release, the Dow Jones Industrial Average was lately up 1.7 per cent, while the S&P 500 Index advanced 20.48 points, or 1.6 per cent, to 1,305.98. The Nasdaq Composite rose 49.29 points, or 1.8 per cent, to 2,827.40.

Despite growing global economic concerns, retail stocks have performed admirably in 2012, or so it shows the SPDR S&P Retail ETF (XRT) -- which seeks to replicate an index that invests in industries such as apparel retail, automotive retail, food retail, department stores, Internet retail, general merchandise stores, drug retail, and hypermarkets and super centers, and that has gained over 11 per cent year-to-date, beating the Dow Jones gain of just 1.57 per cent, gathers ‘MarketWatch’.

Part of the explanation has to be found in the U.S. consumers' confidence, which reached in May the highest it's been since October 2007 according to a Thomson Reuters/University of Michigan index. Warm weather and falling gasoline prices has helped boost consumer spending. Same-store sales for the month of May jumped 4 per cent according to numbers from Retail Metrics, beating analysts' estimates of 1.8 per cent. "It shows a real resiliency of the consumer, and generally speaking, it's a positive sign for the state of the retail economy," Joel Bines, managing director at AlixPartners, said in a telephone interview.

Macy's, that recently reported total sales of $2.015 billion (Rs 11,069 crores) for the four weeks ended May 26, 2012, has just posted an increase of 4.1 percent compared with total sales of $1.936 billion (Rs 10,635 crores) in the four weeks ended May 28, 2011. On a same-store basis, Macy's sales were up 4.2 per cent in May 2012 as compared to May 2011.

Chasing the US high-end department store chain, Zumiez announced that total net sales for the four-week period ended May 26, 2012 increased 23.6 per cent to $37.4 million (Rs 205 crores), which beat analyst estimates, compared to $30.3 million (Rs 166 crores)for the four-week period ended May 28, 2011.

Finally, and without leaving Wall Street, Lululemon Athletica topped the trading floors once again, as the yoga-inspired clothing chain´s shares were “changing hands at a feverish pace ahead of Lululemon’s first-quarter earnings report prior to the opening bell on Thursday morning,” as reported ‘Wall Street Pit’. Lululemon’s shares are up nearly 50.0 per cent year-to-date and last traded below $60.00 (Rs 3,296) back on January 20, 2012.

Stressing the good moment that Lululemon is going through, the stock had its “hold (n/a)” rating restated by analysts at Jefferies Group (NYSE: JEF) in a research report issued to clients and investors on Tuesday. In the same vein, analysts at Wedbush initiated coverage on shares of Lululemon in a research note to investors on Tuesday, May 29th. They set an “outperform” rating and a $90.00 (Rs 4,944) price target on the stock. Separately, analysts at KeyBanc (NYSE: KEY) downgraded shares of Lululemon from a “buy” rating to a “hold” rating in a research note to investors on Friday, May 25. They noted that the move was a valuation call. Finally, analysts at Nomura (NYSE: NMR) reiterated a “neutral” rating on shares of Lululemon in a research note to investors on Monday, May 14.

Related News