Growing Competition is Just 1 of Lululemon's Problems

On Thursday's Market Foolery, host Chris Hill and Motley Fool One analyst Jason Moser dip into lululemon athletica's  (NASDAQ: LULU  )  first-quarter report. 

Chris explains that, although the first-quarter profit was good, the clothing company lowered guidance and called 2014 a "transitional year." The stock ended the trading day down nearly 16%. Jason says that the stock has been priced to reflect expectations of rampant growth. The quarter wasn't bad, he adds, and excluding the $30 million repatriation charge that Lululemon paid for moving $500 million back into the U.S., the company actually beat expectations. Yet he concedes that when management terms a year "transitional," it's code for "look out below." However, Jason sees the company's stock buyback plan as a solid strategy that could work, and he considers the brand not broken, but rather in a period of reestablishment.

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Chris Hill

Full-time host of the Motley Fool Money radio show, MarketFoolery podcast, and other things. Part-time connoisseur of movies, basketball & fine bourbon.

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9/4/2015 10:34 AM
LULU $65.25 Up +0.30 +0.46%
Lululemon Athletic… CAPS Rating: ***