Good Quarter, Achievable Outlook for Lululemon; Maintaining Hold Due to Valuation

4/2 - "We are reducing our FY2008 estimate by $0.03 to $0.72 to account for weaker back half comps (same-store sales) as we expect the majority of the beneficial impact of currency on comps to begin to anniversary in 3Q. Management laid out a very strong strategic plan and an achievable outlook, in our view. We remain neutral, as we think the 2009 P/E of 33x is justified by the significant growth potential of the company and nearly mimics our current expected 2009 growth rate of 35%."

"The majority of new stores will be opened in markets where the company already has at least one store. This should lead to faster returns on the new stores as there will already be brand awareness in those markets."

"lululemon also announced the departure of CEO Bob Meers. He will be replaced by Christine Day, the current president of retail operations...We do not expect the move to have a significant impact on the company’s operation or direction...lululemon continues to focus on product innovation. The company is testing new fabrics and we expect new lines in swim and cycling in 2008."