SOURCE: The Bedford Report

The Bedford Report

September 27, 2011 08:16 ET

Lululemon and The Finish Line Defy the Odds and Maintain Strong Numbers

The Bedford Report Provides Equity Research on Lululemon and The Finish Line

NEW YORK, NY--(Marketwire - Sep 27, 2011) - Athletic clothing retailers have had a surprisingly strong September as strong earnings reports and the upcoming Olympics are expected to drive growth the rest of the year. On the downside, price swings in commodities such as cotton and oil continue to cause volatility in the sector. The Bedford Report examines the outlook for companies in the Retail (Apparel) Sector and provides stock research on Lululemon Athletica, Inc. (NASDAQ: LULU) (TSX: LLL) and The Finish Line, Inc. (NASDAQ: FINL). Access to the full company reports can be found at:

www.bedfordreport.com/LULU

www.bedfordreport.com/FINL

Expectations for retailers were low as the global economy weakened, and consumer sentiment dropped. Fears of unemployment, low wages for those with jobs, high energy prices, and rising food costs will all continue to affect U.S. consumers.

Lower cotton prices could help both retailers and consumers. The latest U.S. Department of Agriculture estimates for 2011/12 project global cotton consumption at approximately 115.2 million bales. After August reductions in both 2010/11 and 2011/12, cotton consumption for the current season is now forecast to grow about 1 percent after a decline of nearly 4 percent in 2010/11.

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Despite considerable headwinds, clothing retailers have maintained strong earnings. Last week The Finish Line Inc., an Indianapolis-based chain of 646 stores, reported that its fiscal second-quarter net income grew 24 percent, helped by strong sales in stores open at least a year, a key metric of a retailer's health. Further, sales so far in September to date have kept up the pace, the company said.

At Lululemon, revenue for the second quarter was up 39 percent from last year to $212 million. For the full fiscal 2011, LULU now expect net revenue to be in the range of $930 million to $950 million and diluted earnings per share are expected to be in the range of $1.10 to $1.14 for the full year.

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