Things were not looking great for clothing retailer Lululemon (NASDAQ:LULU) yesterday. Trends were starting to turn against it, and so were investors. But what a difference a day makes, and Lululemon is back up over 1.5% in Thursday afternoon’s trading thanks to a new plan that calls for the pursuit of a new target market – men.
We learned yesterday that growth was on the decline for Lululemon and that trends, in general, weren’t exactly helping out either. So it turned back to first principles, reconsidered its marketing mix, and discovered that it wasn’t making a lot of sales to men. So, it’s now launching its first-ever men’s line, though it’s focusing mainly on footwear and casual sneakers. It’s called “cityverse” and will feature two new running shoes under that brand. There will also be a women’s equivalent, which proves that Lululemon isn’t abandoning the partner that got it to the dance, just looking to branch out.
Too Little, Too Late?
We know that the trends haven’t been doing well for Lululemon these days. Lululemon’s sales to women, not to mention their handbag sales, have been in open decline since mid-January. Whether February will see a turnaround or not is unclear, but it is clear that the consumer, in general, is starting to lose the will to shop. The rise of buy now pay later services used through the Christmas shopping season—complete with rates that can reach 36% in some cases—is going to be a major demand-pull event for at least the next few months. Lululemon did well in branching out, but they may not find a lot of ground here, as the guys are as tapped as the ladies right now.
Is LULU a Buy or Sell Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on LULU stock based on 21 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 42.78% rally in its share price over the past year, the average LULU price target of $525 per share implies 14.28% upside potential.
