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Lulu's stretching to new heights

April 2nd, 2016 by ,    photos by

A trader's take on this week's news of Lululemon's profits, FoxConn's takeover & the good ol' Canadian dollar

 
 
 

CBC: Lululemon profit rises as sales top $2B for first time last year

Well-loved Canadian yoga wear brand Lululemon reported quarterly earnings this week that surprised to the upside for the first time in a while. Lululemon beat expectations for both earnings and total revenue. Earnings came in at 85 cents per share compared to 80 cents per share and revenue was reported at $704.3 million, over $12 million more than expected. The revenue number was key as it pushed total Lululemon revenue above $2 billion over the year for the first time in the company’s history. Lululemon has been easily solvent for a long time but their performance was not meeting investor expectations during the last few years. This article highlights the “bold moves” the company has engaged in to turn things around and they appear to be working. The stock closed up over 10 percent on Wednesday’s trading day, the day the earning came out, to close at $67.80, almost a 52 week high.

Bloomberg: Foxconn Takes Control of Sharp in Reduced Buyout

It took two years of effort but Chinese based Foxconn has finally confirmed its purchase of well known Japanese firm Sharp. Foxconn is most associated with the famous Apple products its manufactures and Sharp was the electronics firm hat built the first Japanese television. The deal is costing Foxconn $3.5 billion. The deal looked like it wouldn't go through even just a few weeks ago. The dispute was a usual story, price. Sharp has a common problem of old tech firms with possessing high value assets but the company’s structure is too big and clunky. Add to that debt levels too and the company has been to been unable to turn a profit from their assets. This deal could still fall apart with Sharp’s board not having a consensus but as Sharp is need of a deal, and most market watchers think it will go through. The deal is going to be talked for some time regarding the shear persistence and skill of Foxconn head Mr. Gou. Most struggling Japanese firms turn to Japanese banks and the government for help. Gou was able to convince Sharp that Foxconn was a better way forward.

CBC: Canadian dollar tops 77 cents US

Our loonie saw some unexpected strength this week but it has little to do with our own actions. The loonie traded to a 6 month high at one point  on Wednesday to 77.44 cents US before closing the day 77.17 cents, still up .68 of a cent. Oil was down slightly on the day and that was unusual on a day when the loonie charges ahead. The reason for the solid lift higher was from comments made by the US Federal reserve chair Janet Yellen on Tuesday. The comments signaled that the US would be gradually raising rates, not jumping the gun and raising in April, as some had predicted If the US rates rise while Canada’s stays put, it puts a lot of selling pressure on our loonie. With the US not rising, our loonie as some room to breath in the short term. An analyst quoted in this article now believes the loonie will stay above 75 cents US for the near term. 

 
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May 26 2017 6:15am
 
 
 
 

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