lululemon athletica inc. LULU plans to privately buy back nearly 3.3 million shares as part of funds associated with Advent International Corporation, which is one of its investors. The buyback will be carried out under the company’s recently approved $600-million increase in share repurchase authorization. The transaction will be funded using cash on hand and borrowings.
Advent initially had about 20.1 million shares of lululemon. In conjunction with the above transaction, Advent revealed that it also recently sold another 6.7 million shares of lululemon. This partial sale is in sync with Advent’s planned monetization of its interest in lululemon.
Advent’s partnership with lululemon dates back to 2005 when it made its first investment in the company. Since then, Advent has been actively involved with lululemon’s functioning, both as an investor and board member. Lululemon expects the aforementioned share buyback to be accretive to its fiscal 2018 earnings per share by nearly 3 cents.
The lululemon stock lost 1.2% at $122.70 yesterday. Overall, shares of lululemon have rallied 49.3% in the last three months, outperforming the industry’s growth of 14.2%. Additionally, this Vancouver-based company has gained 19% since May 31, following the robust first-quarter fiscal 2018 results and raised view for fiscal 2018.
lululemon’s strategy for 2020, focus on ivivva’s remodeling, product innovation, e-commerce growth, international expansion and the introduction of store formats have been the catalysts to its recent success. Moreover, the company’s robust surprise trend and optimistic outlook have boosted investors’ confidence in the stock.
The above-mentioned factors clearly profess that lululemon still has significant growth potential in the days ahead. This is also evident from this Zacks Rank #1 (Strong Buy) stock’s Momentum Score of B and long-term earnings growth rate of 13.4%.
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Some other top-ranked stocks in the same industry are Columbia Sportswear Company COLM, Guess?, Inc. GES and G-III Apparel Group, LTD. GIII, each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Columbia Sportswear has pulled off an average positive earnings surprise of 18.1% in the last four quarters. The company has long-term earnings growth rate of 11.1%.
Guess?, with an impressive earnings growth rate of 17.5%, has delivered an average positive earnings surprise of 29% in the trailing four quarters.
G-III Apparel has long-term earnings growth rate of 15%. Further, the company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 190.8%.
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