Lululemon athletica inc. (LULU)

raja786 (94.14) Submitted: 10/21/07 11:20 AM : Start Price: $34.06 LULU Score: -1.18

A friend of mine opened my eyes to LULU. I have been around their retail locations in Toronto, which have sprung out of nowhere. They are at all the major malls here, and their only problem at these retail stores seems to be that they are running out of stock on the shelves.

Everybody who finds about this stocks knows this is a great company, and the few that question buying it are pointing to it has an incredibly high PE at the moment. Agreed. It does. What people miss out on is that they don't realize that LULU doesn't just sell pants, they sell a lifestyle. Walk into an actual Lululemon store, talk to the staff, talk to their customers, and that's when you realize how big these guys are going to be.

The second issue that people seem to have apart from the high PE, is that a company like Under Armour and Nike coming up with an equally good product and putting LULU out of business. Nike being of course the company that had initially tried to buy out LULU right before the IPO.

Again to understand this issue correctly, we need to realize that Lululemon has created an extremely strong brand for itself. I have seen girls keep re-using their Lululemon bags as if it were a Holt Renfrew bag. Being part of this chic healthy lifestyle is something that the consumers want to associate themselves with. So if and when Columbia Sportswear or Nike comes out with pants that look like the Lululemon pants, consumers will continue buy them from Lululemon. They aren't looking for basketball shorts, or hockey jerseys. It's a completely different brand, and that's what sets LULU apart.

Thanks,

Tehsin Bhayani

Report this Post Replies: 1 | Reply