Lululemon Stock Is Down 35% From Its High. Time to Buy?
Lululemon Athletica's (NASDAQ: LULU) stock dropped 9% on Jan. 9 after the yoga and athletic apparel maker updated its guidance for the fourth quarter of its fiscal 2022 (which ends on Jan. 29). It now expects revenue to rise 25% to 27% year over year, which is higher than its prior guidance for 22% to 25% growth. It expects adjusted EPS to increase 25% to 27%, which is slightly lower than its earlier forecast of 25% to 28%.
Those headline numbers looked stable, but Lululemon also warned that its gross margin would decline 90 to 110 basis points year over year in Q4, compared to its prior expectations for 10 to 20 basis points of growth. To offset that pressure, it plans to rein in its selling, general, and administrative expenses more aggressively to shield its operating margins.
That revised guidance was disappointing, but Lululemon's stock has already declined about 35% from its all-time high in November 2021. Should investors tune out the near-term noise and focus on its long-term growth prospects instead?
Source Fool.com
