Lululemon Stands Out At Retail's Biggest Conference

Lululemon Athletica inc. LULU stood out at the nineteenth ICR conference where retailers provided guidance updates largely in line to modestly below expectations, driven by traffic struggles.

Lululemon's Stellar Appearance At ICR

However, the Vancouver, British Columbia-based retailer stole the limelight by raising the low end of its fourth quarter EPS estimate to $0.35–$0.37 on SSS of (1) percent–1 percent from $0.33–$0.37 on SSS of (LSD)–LSD; relatively in line with consensus expectations.

Lululemon also highlighted appropriate SKU count, pricing power via innovation and better margins. During Holiday, women's pants comped double digits against tough holiday compares.

“We believe this performance in the company's most mature product category speaks to the company's brand strength and pricing power,” Wedbush analyst Morry Brown wrote in a note.

Brown reiterated Outperform rating and price target of $81, with Lululemon being a member of the Wedbush Best Ideas List.

Baird also maintained its Outperform rating on Lululemon, driven by encouraging by holiday season results. The management expressed confidence in longer-term growth targets (supporting 20 percent EPS CAGR).

Other ICR Attendees

Among other attendees, Express, Inc. EXPR affirmed fourth-quarter EPS view of $0.26–$0.30 on SSS (13 percent) and hopes to mirror the successes of 2015.

Urban Outfitters, Inc. URBN called improved markdowns at the Anthro division the largest opportunity for upside in 2017.

J C Penney Company Inc JCP’s apparel SSS are down LSD-MSD with women's seeing the most pressure. Looking ahead, apparel could remain negative LSD in 2017. On the positive side, management is confident the company can achieve its $1.2 billion EBITDA goal next year even with flattish comps.

William Blair said e.l.f. Beauty Inc ELF remains comfortable with its long-term growth algorithm for compound annual sales and EBITDA of 20 percent from 2016 to 2019. The brokerage is Outperform-rated on e.l.f. shares due to its compelling value proposition.

Meanwhile, American Eagle Outfitters AEO outlined several reasons to expect comp improvement plus margin expansion in 2017 including innovation-led LSD-MSD AUR increases.

For Inventure Foods Inc SNAK, William Blair expects profitability to improve in 2017 with new kettle chip capacity in place, a strong berry harvest, and pricing and pack size optimization in vegetables.

William Blair expects the Outperform-rated Sportsman's Warehouse Holdings Inc SPWH to outperform competitors with solid long-term growth outlook, That said, the brokerage noted that 2017 appears to be more of a transition year given the potential impact of the recent election on firearms purchases in coming months.

Five Below Inc FIVE still expects total sales up 20 percent and EPS growth north of 20 percent in FY 2016 with new store productivity above 90 percent. Holiday SSS were up 0.5 percent, below guidance of 2–3 percent and the company now expects 1 percent for the fourth quarter.