Morningstar | Calvin McDonald To Take the Helm at Lululemon; Shares Continue to Look Expensive
We aren't anticipating material changes to our outlook for narrow-moat Lululemon following the firm's announcement that it has appointed Calvin McDonald to be CEO, effective Aug. 20. McDonald has served as the President and CEO of the Americas region for Sephora (part of the LVMH family of brands) for the last five years, with prior experience at Sears Canada (as President and CEO) and Loblaw. During his tenure, Sephora achieved double-digit growth, expanded its digital platforms, and grew its presence in international markets. We contend this experience will be a valuable asset to Lululemon as the firm taps into new channels (like e-commerce and international markets) to fuel further top-line growth.We expect to maintain our $73 fair value estimate and long-term outlook, which incorporates high-single-digit growth and 53% gross margin over our explicit forecast, for the firm in advance of its second quarter earnings release on Aug. 30. We're also holding steady on our Standard stewardship rating as we wait to develop a better understanding of McDonald's strategic priorities.
We hadn't expected a material operational impact following the resignation of previous CEO Laurent Potdevin in February, as three of Lululemon's senior leaders (Celeste Burgoyne, Stuart Haselden, and Sun Choe) took on additional responsibilities and reported to Chairman Glenn Murphy. Going forward, Murphy will continue to serve as Chairman of the Board and help with the leadership transition. The three executives responsible for Lululemon's interim operations will report to McDonald once he assumes its top spot.
lululemon athletica is a designer, distributor, and retailer of athletic apparel. Co.'s athletic apparel is marketed under the lululemon and ivivva brand names. Co. provides a line of apparel and accessories for women, men and female youth. Co.'s apparel assortment includes items such as pants, shorts, tops, and jackets designed for healthy lifestyle and athletic activities such as yoga, running, training, other sweaty pursuits, and athletic wear for female youth. Co. also provides fitness-related accessories. Co. primarily conducts its business through two channels: company-operated stores and direct to consumer. As of Jan 28 2018, Co. operated 404 stores.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.