Lululemon Aiming to Double Sales by 2026, Analyst Sees Nearly 70% Upside in Shares Over Three Years
2022.04.20 16:46
Lululemon (LULU) Aiming to Double Sales by 2026, Analyst Sees Nearly 70% Upside in Shares Over Three Years
Lululemon Athletica Inc (NASDAQ:LULU) said it is looking to double its revenue to $12.5 billion by 2026, driven by stronger demand for workout clothes in the post-pandemic era.
The athletic apparel retailer declared a number of long-term growth objectives on Wednesday, citing three primary growth drivers in the following years including customer experience, product innovation, and market growth.
The company said it will attempt to double its men’s and digital sales, and boost international revenue by fourfold in the following five years.
Moreover, Lululeon hinted at the official launch of new membership service in the near future, as well as its decision to enter Spain and Italy markets by opening new brick-and-mortar stores.
“We remain early in our growth journey,” said Calvin McDonald, CEO of Lululemon. “I am excited about taking our growth strategies to the next level.”
Lululemon’s sales surged over 40% in 2021 from 2020, reporting a total of $6.25 billion, driven by increased demand for its yoga pants, leggings, and sports bras.
The company said it anticipates EPS growth to outstrip revenue growth in the following five years and expects to expand its square footage on a yearly basis in the low doubled digits.
Lululemon also estimates its women’s and North American businesses to record a low double-digit annual growth rate in revenue in the next five years.
Quo Vadis Capital analyst John Zolidis said that the provided guidance implies a $680 per share valuation, which offers a 68% upside over three years to early 2025.
“We believe the Street is inclined to believe LULU’s targets given success achieving previous three year goals much faster than anticipated. Accordingly, we see the stock holding its premium multiple and believe investors should remain with long positions, or buy on weakness,” Zolidis wrote to clients.
Stifel analyst Jim Duffy also reflected positively on LULU stock.
“These objectives are stronger than our expectations of +low/mid-teens revenue CAGR and mid-teens+ EPS CAGR, but still leave room to deliver multi-year upside… We are encouraged by the confident outlook,” Duffy wrote.
By Senad Karaahmetovic
