Lululemon Stocks Downgraded

Lululemon stocks have been downgraded to “underperform” by FBR Capital Markets. FBR Capitalist says the company will be hit by rising costs and poor numbers for Q2 2011 and could result in share selloff. Some investors have chosen to act prior to the June 8 earnings report and stocks have taken a bit of a tumble. I wonder if this downgrade by FBR Capital Markets takes into account the expected Q1 disruption with the ecommerce revamp and the interruption to sales.

From The Vancouver Sun, here’s an excerpt:
Company’s shares closed at $89.82, down $5.66, on Thursday on the Toronto Stock Exchange. FBR Capital Markets downgraded the stock of Vancouver-based sportswear retailer Lululemon Athletica to “underperform” ahead of its quarterly results and said the company’s margins may be pressured in the near term.”The stock appears priced to perfection and we believe any glitch on earnings could result in a sell-off,” analyst Liz Dunn wrote in a note to clients. Dunn said she was concerned that the quality has slipped a bit due to changes in the sourcing operations but expects the company to maintain its quality at the expense of margins.”

Additional reads:  The Globe and Mail

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