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The firm hosted investor meetings with LULU CEO Calvin McDonald, CFO Meghan Frank, and VP of Investor Relations Howard Tubin in Boston last week.
“We continue to view LULU as a high-quality asset on sale, given its 1) superior financial profile, 2) likelihood of ongoing beats & raises, & 3) potential to expand across geographies, channels, & categories L-T,” the analysts wrote.
Analysts stated that there were a number of key takeaways from their meeting with LULU management, including China potentially supporting above-algo revenue growth for longer, an incremental North America revenue growth opportunity via higher OTM & men’s penetration, and GM potentially still having room to move higher over time.
“In our view, LULU has approached the Chinese market in a unique way that could make it one of the few NA specialty retailers to succeed in the region,” said analysts. “In fact, it’s possible ongoing outsized China growth could support above-algo topline growth (15%) growth for longer than we had previously anticipated.”
They added that “while LULU’s NA door opportunity may be more limited,” there is potentially an additional revenue/door opportunity over time.
