Shares of Lululemon (LULU) are rising on Thursday before the company releases its second quarter earnings report after the closing bell. As consumers have grown more discerning, investors have become wary of the retail sector, with Lululemon shares down almost 50% year-to-date. Does this athletic apparel brand have what it takes to turn it around?
Stifel managing director, equity research analyst Jim Duffy joins Catalysts to break down how Lululemon can compete amid growing competition and more price-conscious consumers.
Duffy explains his bullish take on the stock, noting that there was a product that had to be pulled from shelves: "We think it’s broadly expected that there’s going to be a reset to the outlook. We, however, want to buy the stock ahead of that. This is the best economic model in my coverage universe. Now we are believers in the global trend of greater concern for health, wellness, fitness, self-actualization. Lululemon uniquely positioned to lead that trend."
On pricing concerns Duffy states: "The pricing that’s been a concern on Lulu and competition has been a concern on Lulu for as long as I’ve been following the stock. The key for Lulu and the key to their success is innovation and the quality of the product, which distinguishes it from alternatives in the marketplace."
For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
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