Loule Lemon Chairs are falling off a cliff following the company's latest earnings report.

Is this thing an actual lemon or can they turn it into lemonade?

And unfortunately I'm not talking about the lemons that Jordan Belford ate in the both of Wall Street in the form of quailudes. We were talking about the bad kind of lemons here. So let's go ahead and dive into Lulu Lemon. Welcome to the 5-minute peel. My name is David from W.S. So let's go ahead and get started. So what I'm going to do is pull up and share my screen here so that we can walk through things.

And what we see first and foremost, this is a chart of Lulu stock price over the past year or so. And this is some basic information on the company itself. So as we can see, it's nearly a $50 billion stock. It's had a great past year up over 24%. Then we scroll down this column, we can start to see a little bit why. So we see margins are improving nearly across the board up 5.3% in terms of a gross margin time to nearly 60%. Even margins are improving strongly as well. And operating cash flow is absolutely exploding, more than doubling over the past year. A lot of that just has to do with the lack of restructuring charges that were hit in 2022. Those were gone in 23, so not a huge thing to bank on going forward, but obviously moving in the right direction. Now, something that we do want to bank on going forward is the company's cash ratio and more broadly, their solvency and liquidity. The company is very solid. They have more cash than they do current liabilities and hardly any debt on the balance sheet as well about 1.4 billion

in total most of that in lease liability so i've highlighted some of the most important stuff from the

q4 2023 results uh this is another one of those companies that struggles with counting but they did

manage to beat on both the top and bottom delivering 3.21 billion beat on EPS as well reporting 529

versus the 5 per share

that was expected.

Big reason for that has been growth internationally.

Now, international growth does up 56% excluding currency fluctuations, and the reason that

the stock has been selling off is largely because of this line item right here.

Seeing only 9% annual revenue growth here in the United States versus 29% for the same period in the year prior. Obviously, that's a huge drop off. It's something that came as quite the shock to analysts and that's driving a lot of the downside. Management blamed a shortage of clothing within the size range of zero to four. I didn't know there was any size zero to four left in the United States, but either way, apparently it's a big problem according to management.

Growth profit increased at the same time. So why is everybody so upset? Well, same store sales were looking disgusting.

This is a hugely important metric in retail. It's a growth at an individual store basis.

Only 7% in the United States, but 44% internationally speaks to strong international growth. But a maturing company exiting its growth stage here in the United States, but 44% internationally speaks to strong international growth,

but a maturing company exiting its growth stage here in the United States.

Now, this nets out to 12% total, which isn't bad, but analysts we're expecting 12.3%.

And then guidance didn't really get us too excited either, projecting only 9 to 10% for Q1 and 10%

for the entire fiscal year. That's a strong slowdown from what the company has experienced in the past. But once again, what we're seeing here in real time is a company going through puberty. You never want to call somebody ugly in middle school because you never know what's going to happen and what's going to turn out by the end of senior year. So Lulule M is kind of in that middle school stage right now going from a very

high growth company to a more mature established industry player. Now they did reiterate previous

guidance of doubling revenue from 2021 by 26 to 12.5 billion. We'll see if they can actually do that,

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