Lululemon Athletica Inc. (NASDAQ:LULU) Posts Positive Q1 Earnings amidst Bloated Valuation Concerns


Dallas, Texas 06/10/2015 (Financialstrend) – Poor weather and delays in West Coast port could not prevent yoga wear retailer Lululemon Athletica Inc. (NASDAQ:LULU) from posting better than expected earnings for the first quarter. Positive earnings was a confirmation that the retailer’s turnaround plan after a high-profile recall of yoga pants in 2013 was finally working.

Positive Outlook

Better than expected sales for the first quarter was the talk of Street that saw the stock close on a high of 10%. Lululemon Athletica Inc. (NASDAQ:LULU) continues to benefit from brand popularity as well as its online portal generating impressive sales. As a result, the retailer boosted its full-year outlook while forecasting a better than expected second quarter in terms of revenue growth

The company has been expanding its product line as well as solving supply chain problems that affected its earnings in the previous quarters.  Paying closer attention to international growth also continues to offer the retailer alternate synergies of growth.

International expansion has seen Lululemon Athletica Inc. (NASDAQ:LULU) open a second shop in Singapore with plans in place to tap into the Hong Kong marketplace.  At the end of the first quarter, the retailer had a total of 316 stores as it also plans to open it’s first store in Dubai.

Bloated Valuation concerns

The maker of high-priced yoga apparel is however eliciting some concerns in the street. Trading at 34 times earnings Lululemon Athletica Inc. (NASDAQ:LULU)’s bloated valuation continues to be closely watched. The stock looks expensive even as it continues to face headwinds on same-store sales in brick and mortar sales that dropped by 1%.

Hopes of sales growth is the only thing that is keeping investors glued to the stock. However, it is still unclear whether the retailer will ever return to its historic profit growth as it continues to face stiff competition in the yoga pants business.

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