LULU has struggled a bit in the past few years but is putting things back together now. The last quarter was good and it has beaten estimates in eight straight quarters. The loss of the chief designer was a blow but new product sales look fine now. Valuation has really dropped, now at 22X earnings. Historical range is more than twice that. The balance sheet and cash flow are very strong. Growth expectations look good. That being said, an economic slowdown is not going to help here. But we think its 31% one-year decline reflects the situation fairly well. We still like its long term growth prospects and high per-square foot sales growth. Overseas will likely show faster growth in the short term, from a smaller base.
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