Lululemon Athletica (LULU) got a boost after it announced the rollout of its Selfcare toiletries line and a partnership with France’s Sephora. Top stock Lululemon is currently in buy range.
SEE ALSO : Lululemon reveals five-year expansion plan
The line includes a dry shampoo, deodorant, face moisturizer and lip balm which are available in full and gym size. It will be available in 50 Lululemon stores, selected studio partners in North America and on Sephora.com.
“Lululemon has always been in the work of creating solutions for sweaty problems and our Selfcare line is an extension of that approach,” Chief Product Officer Sun Choe said in a news release.
“Like our apparel, Lululemon Selfcare has been designed with function at its core and created to support guests pre and post workout,” she continued.
The Sephora tie-up makes sense, as CEO Calvin McDonald served as a top executive at the makeup chain before joining the yogawear maker. Sephora is a subsidiary of LVMH Moet Hennessy (LVMUY).
Lululemon spent two years researching and developing the product line, with CFO PJ Guido saying the firm was “happy with the test results” and stating during the company’s earnings call in March that the firm was “excited” about the line.
The development is welcome news for CAN SLIM connoisseurs. The N in the acronym stands for “new,” and studies have shown the great stock market winners of the past all had freshness, such as innovative products and services.
Lululemon stock closed up 2.6% at 188.03, still in buy range after breaking out of a six-week flat base. The correct entry is 179.60, MarketSmith analysis shows.
Strong earnings previously pushed the top stock above its buy point, though it ran into trouble quickly. It is back above the entry in good volume.
The relative strength line of the top stock is near highs. In addition, the current base is first stage, which IBD research has found has a higher likelihood of success than later stages.
Lululemon stock has a Composite Rating of 98, which puts it in the top 2% of stocks tracked. Strong earnings are key for winning stocks, and here Lululemon fares well.
IBD’s Stock Checkup tool shows EPS has grown by an average 36% over the last three quarters. Over the last three years earnings have grown by an almost as impressive 31%,
The new personal care products are part of Lululemon’s overall expansion plans.
At its analyst day, Lululemon unveiled plans to enter the athletic shoe market, double men’s sales and digital sales and quadruple international sales by 2023 as part of its new five-year growth plan.
Invading China will be key to its ambitions, with management predicting its revenues there will exceed those from Europe and Australia combined by 2023.
The yoga gear maker and retailer, famed for its tight-fitting pants, said its core women’s business and North America stores will remain focus areas. They are expected to generate revenue growth in the low double digits annually for the next five years.
Lululemon sees total annual revenue growth in the low teens for the next five years, operating income growth topping revenue growth, and EPS growth matching or exceeding operating income growth.
The company also plans capital expenditures of 6%-8% of revenues and annual square footage growth in the low double-digits.