Wedbush said the company has less near-term upside ahead.
“While we continue to see LULU as best in class among specialty retailers, we are moving to the sidelines in anticipation of potentially less margin upside ahead, based on insights from our proprietary data products… Wedbush Big Data, though historically erring on the low side, signals potentially less margin upside ahead, and now forecasts gross margin below street estimates, drawing on data points including assortment, average price, and average full price ticket value… According to our data products, revenue looks mixed as prior top-line strength showcased in LULU’s holiday beat and raise looks to be softening, with big data now signaling revenue running in-line with consensus, while Wedbush Search data, forecasts 4Q revenue growth of 19.03%, below consensus for 23.82%… We see measured guidance as likely, as a turbulent February likely hits LULU just as hard as the rest of retail, which may be taken less positively by investors given the notable growth metrics and margin expansion LULU has typically posted in recent quarters…”
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