Lululemon Traffic Remains An Outlier In December

Wedbush’s Morry Brown noted that Lululemon Athletica inc. LULU's momentum has continued in December, while its local-themed collection has received a robust response in Dallas.

Brown maintains an Outperform rating on the company, with a price target of $81.

Positive Trends

“LULU remained the clear traffic outlier in specialty with traffic levels consistently above peers,” the analyst mentioned, while adding, “Customers have responded well to the newest merchandise deliveries and gifting assortment, and clearance levels had also sold down meaningfully by the third week of December.”

Brown pointed out that outerwear trends have moved away from fur-line coats, which had been popular in recent years, to more athleisure designs, which is likely to benefit Lululemon, with white and puffer jackets seeing significant sell through.

Exclusive Collection

Regarding the exclusive collection launched at select stores in Dallas, in partnership with a local artist, the analyst stated, “Our checks indicate customers responded well to the initial launch of exclusive tees, tanks, and leggings and units sold down from around 30 to around 10 in a couple weeks.”

Although this in itself is unlikely to be a needle-mover, Brown believes it indicates the ongoing opportunity for Lululemon to participate in the local community, which is likely to be favorable for brand appeal and sales.

At last check in Tuesday's pre-market session, shares of Lululemon were down 0.66 percent at $66.26.