LVLU - Lulu's Fashion Outlet downgraded to Neutral on inventory demand risks

Keybanc Capital Markets stepped to the sidelines on Lulu’s Fashion Outlet Holdings ( NASDAQ: LVLU ) on Monday.

The firm’s analysts indicated that there is less enthusiasm on the name due to tougher comparisons into 2023, as well as a lingering inventory overhang.

“Inventory remains high at +110% year over year (as of 3Q) and consumer demand has softened, which we think will continue to pressure margins in the [near-term] as the company navigates a more promotional environment,” the team explained. “Though LVLU has a [long-term] opportunity within its test and reorder model, we'd look for improving inventory positions and a more stable retail environment [near-term] to gain confidence.”

As such, the team cut their rating to Sector Weight from Overweight. Keybanc’s analysts also lowered their net revenue forecast for 2023 to $458.1M from $548.2M and trimmed their adjusted EBITDA expectations to $35.6M from $55.6M.

Dig into sell-side ratings on the stock .

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