Lulu's Fashion Lounge rating cut by Cowen on waning demand, margin squeeze
23/11/2022 12:50
** Brokerage Cowen cuts rating on Lulu's Fashion Lounge
Holdings Inc LVLU.O to "market perform" from "outperform",
citing negative sales and margin trends ahead
** Cowen analysts expect the fashion brand to face continued
margin pressure from higher promotions and discounts; cut PT to
$5.50 from $8.00
** Brokerage adds LVLU's sales could decline until H2 2023
as company laps strong demand for dresses seen this year,
building into tough comparisons for H1 2023
** Falling demand for dresses could also lead to tempered
growth in LVLU's new customer acquisition - Cowen
** "(LVLU) will need to strike the right balance between
investing in marketing vs. preserving margins, which is a
trade-off that may result in more muted active customer growth"
- brokerage
** 5 of 8 brokerages rate stock "buy" or higher, 3 "hold";
median PT $8.28 - Refinitiv
** YTD, company's shares down ~58% as of last close
(Reporting by Deborah Sophia in Bengaluru)
((DeborahMary.Sophia@thomsonreuters.com))