Year-End Review: Athletic Apparel

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Dec 30, 2014

Andreeva downgraded Gap to a Perform. The analyst noted that while guidance for 2014 was lowered, the estimates “under new leadership [are] likely conservative” because it excludes “$0.11 of non-recurring benefits” and the “GPS is missing original expectations by ~ $0.30 this year.” She noted that Piperlime, another Gap brand, is re-positioning but Athleta “remains strong.” The analyst concluded, “While valuation [is] not taxing and expense control [is] likely continues into ’15 (minimum wage becomes offset), estimates [are] headed lower and multiple [is] unlikely to expand in absence of top-line stabilization.”

Anna Andreeva has a 57% overall success rate recommending stocks with a 5.3% average return per recommendation.

The top analyst consensus for Gap on TipRanks is Hold.

Lululemon:

Lululemon (NASDSAQ: LULU) is a yoga-inspired athletic apparel retailer that produces its own clothing line which is sold in Lululemon stores across the globe. Lululemon started out the year on a negative note when they had to recall a line of yoga pants for being too see-thru. As a result, Lululemon stock dropped 20% and the company lost $2 billion in value. In addition, the company received some negative attention last year when founder Chip Wilson made controversial comments about the types of women who should and should not wear Lululemon yoga pants. Soon after, Wilson stepped down as CEO and sold half of his stock position.

However, Lululemon has been working hard to rebuild its reputation and win back its core customers in addition to drawing in new ones. In fact, the athletic retailer has become one of the fastest growing retail companies today, climbing 17% just last month.

LULU has a 1-year high of $59.84 and a 1-year low of $36.26.

Lululemon was last rated on December 16 by Cowen & Co. analyst Oliver Chen, who initiated an Outperform rating on the stock. Chen pointed out that traffic in Lululemon stores has been gradually increasing and new products, marketing initiatives, and online momentum will improve traffic even more. In addition, the analyst believes Lululemon costumers are loyal and he is optimistic that the retailer will bring in consumers at the high end of the market.

In the past year, Chen has successfully made 31 ratings out of 50 total, earning a 62% success rate recommending stocks and a +16.2% average return per recommendation.

On average, the top analyst consensus for Lululemon on TipRanks is Hold.

Under Armour:

Under Armour (NYSE: UA) is a supplier of sportswear and casual apparel. Under Armour was the sponsor of the United States speed skating team in the 2014 Sochi winter Olympics early this year. The team did not bring home any medals, blaming the athletic apparel company’s clothes for slowing them down.

However, this hasn’t stopped Under Armour from performing well in the market. The athletic retailer has posted at least double-digit profit increases in all but one of the six past quarters and they have recorded 15 consecutive quarters of double-digit sales gains. Most recently, Under Armour has been reaping the benefits of the “athleisure” trend that has been rapidly gaining popularity.

UA has a 1-year high of $73.42 and a 1-year low of $40.98.

Under Armour was last rated on November 18 by BB&T Capital Markets analyst Corinna Freedman, who gave the athletic retailer a Buy rating and an $80 price target. She noted, “We find multiple compelling drivers to support growth… Long term, we see a path towards $10B in revenue. We believe that UA can ultimately replicate its North American market share (~5%) on a global basis, which we estimate would imply an additional $5B in total revenue beyond FY’16."

In the past year, Freedman has successfully made 12 ratings out of 22 total, earning a 55% success rate recommending stocks and a +12.5% average return per recommendation.

On average, the top analyst consensus for Under Armour on TipRanks is Moderate Buy.