Lululemon Athletica, the renowned maker of exercise gear, saw its stock reach an intraday record, positioning itself for a potential new closing high. Analysts from William Blair believe that the company’s management is likely to raise its financial forecasts, signaling further growth for the brand.
Stock Soars on Broad-Based Strength
Lululemon’s stock surged to a high of $516.39 before settling at $512.78, representing a 0.7% gain. If the stock closes at this level, it will surpass the previous record of $511.03 set on December 21, according to Dow Jones Market Data. With a remarkable 60% increase in value throughout 2023, Lululemon is on track to achieve its best year since 2019.
Positive Forecast Boosts Investor Confidence
Sharon Zackfia and her team of analysts from William Blair believe that Lululemon’s recent strong performance will continue. Expecting the management to elevate its forecasts for fourth-quarter earnings and sales during the upcoming ICR Conference from January 8 to January 10, the analysts have raised their estimates for fourth-quarter revenue growth and earnings per share. William Blair maintains an Outperform rating on Lululemon’s stock.
Favorable Market Conditions Drive Growth
The analysts highlight the contrast between this year’s performance and previous years. Unlike last year, where severe winter weather affected last-minute traffic, both the United States and Canada experienced unseasonably mild weather leading up to Christmas this year. As a result, store traffic remained robust and comparable to last year. Furthermore, minimal markdown activity occurred prior to Christmas.
However, after Christmas, Lululemon clothing went on sale as it has done in previous years. In-store markdowns increased approximately 30% compared to the same period last year, while online markdowns were up by 25%.
Anticipation Builds for Fourth-Quarter Financial Report
Investors eagerly await Lululemon’s financial report for the fourth quarter, which is scheduled to be released in the spring. It will provide a comprehensive overview of how successful the holiday season was for the company.