lululemon(US:LULU) Haitong Securities International·2026-01-08 02:35Investment Rating - The investment rating for Lululemon Athletica is maintained at "Neutral" with a target price of $215.50, reflecting a potential upside of 1.5% from the current price of $211.72 [2][16]. Core Insights - The company reported a revenue of $7.46 billion for 3QFY25, which is a year-on-year increase of 7.0%. However, revenue growth is expected to slow in 4QFY25 due to calendar shifts, with management anticipating a narrowing of overall revenue growth compared to the previous quarter [4][13]. - The current CEO, Calvin McDonald, will step down in January 2026, and the board has appointed Marti Morfitt as Executive Chair, with Meghan Frank and Andre Maestrini serving as Co-CEOs until a permanent CEO is found [4][16]. - The gross margin for 3QFY25 was reported at 55.6%, a decrease of 290 basis points year-on-year, which was better than the previously guided impact of 410 basis points [5][14]. - The company is focusing on product innovation to revitalize its North American business, with plans to increase the proportion of new products in the Spring 2026 collection to 35% [6][15]. Financial Summary - Revenue projections for FY2025, FY2026, and FY2027 are $11.03 billion, $11.58 billion, and $12.14 billion, respectively, with year-on-year growth rates of 4.2%, 5.0%, and 4.9% [9][16]. - Net profit estimates for the same periods are $1.55 billion, $1.51 billion, and $1.60 billion, reflecting changes of -14.4%, -2.9%, and +6.1% year-on-year [9][16]. - The company has a strong cash flow position, holding $1.0 billion in cash with no debt as of the end of 3QFY25, and has approved a new $1 billion share repurchase authorization [5][14].