Lululemon Still In 'Warm-Up' Phase of Growth Story
NEW YORK (TheStreet) -- Lululemon Athletica
Lululemon has "mastered a differentiated formula of functional, feminine, and versatile product which offers a strong consumer value despite high prices and appeals to mothers and daughters," Citi analyst Oliver Chen writes in a note on Monday, where he initiated coverage of the stock and set a 12-month share target price of $90.
"In our view, LULU is still in the 'warm-up' phase of its growth trajectory as it still has significant
The analyst notes that lululemon's gross margin is impressive compared to other athletic apparel makers, such as Under Armour, at 54% and 48%, respectively.
Shares were rising 3% to $71.60 at last check.
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Lululemon is more than just a brand, it's a way of life and the fact that customers perceive the product as a premium product that they can't get anywhere else, gives the company a leg up in an increasingly competitive and hot niche retail area of athletic apparel especially vs. industry competitors Nike
One of the biggest challenges to lululemon's growth story is that it remains without a CEO. Its current chief executive Christine Day announced her resignation in June. However, Chen believes that the company could benefit from a new leader's perspective.
"Plans have been laid for the next five years and a vision set for the next 10. Now is the right time to bring in a CEO who will drive the next phase of lululemon's development and growth," Day said in June. "I will continue to actively lead the organization while the board searches for a new CEO, and will work to ensure a smooth transition."