Something doesn't smell right within LULU management team. In their last call, there was absolutely no mentioned of any quality issues with their pants. Now they want us to believe this story? What can really change within 6 weeks or so...?
If anything, I thought Ms Day blamed the slower than expected growth due to their new POS system at the cashier checkouts. Another reason was that LULU had sold a lot of gift cards this holiday season. Shoppers were expecting discounting after Christmas but then those gift cards were never converted into actual sales. This is why I thought Q1 will be challenged.
I was a big bull of LULU. The story is NOT adding up! Sorry, Ms Day. You must come clean...!
I agree - I've been long for 4 years - with average cost basis of about $13. Events like this make you wander about the ability of the CEO to manage growth while still ensuring superior product quality.
Having said that - this is likely a one time issue and they did act decisively once they became aware of it . These things happen even to the best of companies (antenna issue on early iPhones, break issues on Toyotas, etc.) Absent this issue - guidance looked reasonable so most of the bad news may now be priced in and stock may trend higher after the initial hit tomorrow AM.
Good to see you. It's been a long time!
The fact that LULU will not release their earnings till next week (very late in the cycle), is telling me that Ms Day is holding out as long as possible to see what Q1 revenues will do. We are well into the second month for Q1. I don't think LULU has ever waited this long just to release Q4 earnings. Something doesn't seem right.... Remember, last year LULU saw SIGNIFICANT growth in Q4'11 and Q1'12. It's tough to beat on those metrics again.
Lastly, I noticed a lot of clothing retailers have been discounting 30-40% in the last few weeks. I know LULU does not discount but at some point Athleta will take a small bite out of LULU's growth. Also, I do noticed women in my gym are wearing Athleta more frequently than I have ever seen. I live in Orange County, CA....home of trend setters.
I was long on LULU but got out at $75. I knew LULU would just cycle through the channels. I think the next leg will be down. JMO.
That's my bet. Been bullish on LULU forever. Now, time to flip the switch and go the other way.