Lululemon Athletica Inc. (NASDAQ:LULU) is hitting the brakes on its latest innovation, the Breezethrough collection.
JPMorgan analyst Matthew R. Boss has slashed his 2024 earnings estimates and removed the stock from his Analyst Focus List. The company's stock, currently priced at $272.06, faces a revised price target of $338.00 for December 2025, down from a previous $457.00.
Lululemon has pulled its Breezethrough collection from both online and in-store sales just weeks after its launch. The Breezethrough collection, aimed at hot, low-impact workouts, faced criticism over its design, with a 3.1-star rating from 112 reviews highlighting issues like unflattering seams and discomfort.
Lululemon's Innovation 'Pause' Raises Concerns
Lululemon's Breezethrough collection, launched on July 9, is experiencing significant pushback.
According to Boss's fieldwork, "LULU has now paused sales on the recently launched Breezethrough collection" after receiving "guest feedback" that highlighted design flaws.
The collection, intended for hot, low-impact workouts, has been criticized for its "V" shaped back seam and "U" shaped front seam, which customers found unflattering.
'Execution Concerns'
The Breezethrough line was expected to drive growth in Lululemon's women's leggings category through the second half of 2024.
However, the pause in sales "compounds recent in-stock/color palette 'execution' concerns," Boss notes.
The innovation was a key driver behind the company's revenue growth expectations for the latter part of the year. As a result, JPMorgan has lowered its 2H24 revenue growth estimate to 8%, below the street's forecast of 13%.
Op Margins Expected To Drop
The halted innovation has led to a revision in earnings projections. Boss now models a decrease in 2H24 U.S. revenue growth to flat year-over-year, with international growth expected to moderate. This adjustment contributes to a lowered full-year EPS forecast of $13.90, versus the street's $14.34.
The firm's operating margins are anticipated to drop to 22.8%, reflecting a fixed cost deleverage.
While Lululemon's stock has seen strong performance, current challenges with product innovation and execution issues are weighing on its growth prospects. Investors should brace for volatility as the company adjusts its strategies.
Lululemon Athletica Inc.(納斯達克股票代碼:LULU)正在停止其最新創新 Breezethrough 系列。
摩根大通分析師馬修·博斯下調了2024年的收益預期,並將該股從分析師焦點名單中刪除。該公司的股票目前定價爲272.06美元,其修訂後的目標股價爲2025年12月的338.00美元,低於之前的457.00美元。
Lululemon在推出僅幾周後就將其Breezethrough系列從線上和店內銷售中撤出。Breezethrough 系列針對高溫、低衝擊力的鍛鍊,因其設計而受到批評,112條評論的3.1星評分強調了接縫不討人喜歡和不舒服等問題。
Lululemon 的創新 “暫停” 引起了人們的擔憂
Lululemon於7月9日推出的Breezethrough系列遭到了重大阻力。
根據Boss的實地考察,“露露在收到強調設計缺陷的 “客人反饋” 後,“露露現已暫停了最近推出的Breezethrough系列的銷售”。
該系列專爲高溫、低衝擊力的鍛鍊而設計,因其 “V” 形背縫和 “U” 形前縫而備受批評,顧客認爲這不討人喜歡。
'處決問題'
預計到2024年下半年,Breezethrough系列將推動Lululemon女士緊身褲類別的增長。
但是,Boss指出,銷售的暫停 “加劇了最近的庫存/調色板'執行'問題”。
這項創新是該公司今年下半年收入增長預期的關鍵驅動力。結果,摩根大通將其24年下半年的收入增長預期下調至8%,低於華爾街預測的13%。
預計營業利潤率將下降
停止的創新導致了收益預測的修訂。Boss現在預測24年下半年美國收入同比增長將下降至持平,國際增長預計將放緩。這一調整導致全年每股收益預期下調至13.90美元,而華爾街的預期爲14.34美元。
該公司的營業利潤率預計將降至22.8%,這反映了固定成本的去槓桿化。
儘管Lululemon的股票表現強勁,但當前產品創新和執行問題方面的挑戰正在壓制其增長前景。在公司調整策略時,投資者應爲波動做好準備。