Shares of the sportswear maker Lululemon Athletica Inc. (LULU) have increased by more than 51 percent since the beginning of the year. The business has seen rapid e-commerce growth, which allows it to compensate for the decline in traditional stores’ traffic. However, many risks, including the trajectory of the COVID-19 pandemic in the United States and other nations, impact the business of Lululemon Athletica. The leadership does not give its own guidelines, but expects a small growth slowdown. Generally speaking, despite the optimistic outlook for the pre-holiday season, due to the general market situation and not completely expected consumer behavior, LULU shares could remain volatile.
Lululemon Athletica announced a sharp rise in revenue at the beginning of December, thanks to a fast-growing channel of online sales. In the pre-holiday season, the business got off to a strong start, but the pandemic still restricts the potential of stores. While last quarter’s overall growth was 22 percent year-on-year, sales fell 18 percent at traditional Lululemon Athletica stores.
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Lululemon stores have historically seen high traffic during the pre-holiday season, but the company this year expects participation to be about 70 percent of last year’s figures. The firm also believes that growth will slow down in the current quarter from the 22 percent shown in the previous reporting period.
A large volume of inventory is a concern for Lululemon, and this level has risen year-on-year by 23 percent. The company claims that, without cutting costs, it can cope with this rise, which occurred due to the temporary closing of stores in the spring.
The good news for investors in Lululemon is that all of its issues are probably temporary. They should be prepared for increased volatility at this point, but Lululemon’s benefit is a huge loyal customer base.
Lululemon Athletica Inc. (LULU) was stable at marginal drop of -0.02% to conclude the Monday trading at $351.36.