lululemon(US:LULU) First Shanghai Securities·2024-12-12 11:10Investment Rating - The report assigns a "Hold" rating for lululemon, with a target price adjusted to $400 per share, corresponding to a FY2025 P/E ratio of 26.4 times [1][15]. Core Insights - The North American market has reached a bottom, while significant growth is observed in the Chinese market, indicating that the global expansion strategy is yielding results [1][5]. - In Q3 2024, lululemon's total revenue was $2.4 billion, representing a year-over-year increase of 9%, exceeding the consensus growth expectation of 7% [5][6]. - The adjusted gross margin for Q3 was 58.5%, which is 40 basis points higher than the adjusted gross margin in Q3 2023, outperforming the guidance of a 50-60 basis point decline [5][6]. - Net profit increased by 41.5% year-over-year to $350 million, surpassing the consensus expectation of $340 million [5][6]. - The company plans to launch more colors, prints, and patterns in Q1 2025 to enhance product offerings, which is expected to drive growth [15]. Summary by Sections Performance Overview - In Q3 2024, lululemon's revenue was $2.4 billion, up 9% year-over-year, driven by strong performance in North America and international markets [5][6]. - The adjusted operating margin increased by 70 basis points to 20.5%, benefiting from lower inventory and management costs [5][6]. - The company reported an EPS of $2.87, exceeding the consensus estimate of $2.75 [5][6]. Regional Performance - North American revenue grew by 2% year-over-year, with Canadian revenue increasing by 9% and U.S. revenue remaining flat [5][6]. - International revenue surged by 33% year-over-year, with mainland China showing a 39% increase [5][6]. Future Guidance - For FY2024, lululemon expects net revenue to be between $10.452 billion and $10.487 billion, up from previous guidance of $10.375 billion to $10.487 billion [6][5]. - The company anticipates Q4 2024 net revenue to be between $3.475 billion and $3.510 billion [6][5].