lululemon athletica inc. (NASDAQ:LULU)

CAPS Rating: 3 out of 5

The Company is a designer and retailer of technical athletic apparel in North America.

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Member Avatar TMFSeeker (35.96) Submitted: 11/12/2014 1:09:44 PM : Outperform Start Price: $45.22 LULU Score: +18.94

lululemon is a specialty retailer that designs and sells technical athletic apparel under its lululemon athletica (adult) and ivivva athletica (kids) brand names. The company operates an e-commerce business and also sells 17% of its goods Direct to Consumer, and the remainder through wholesale outlets and showrooms. The company has 254 corporate-owned stores: 54 in Canada, 171 in the U.S. and 29 in Australia and New Zealand.

This is another restructuring story in the consumer space that I think is set up well for 2015. The company has experienced a turbulent two-year period that included the departure of its founder and CEO, product malfunctions and recalls and supply-chain problems. These events led to a falloff in sales and a confused consumer - just at the time when the competitive environment has heated up from the likes of Nike, Under Armor and the Gap (with its Athleta brand). The company now has new management in place, a new private equity investor stake and has fixed many of its previous supply-chain issues.

I'd say my interest in the company initially peaked back in August when private equity group Advent International took an $845 million stake in the company for an 8% premium -- at the time this was $42. This was significant not only because the founder reduced his stake to just 13% from 28% but also beacuse it got Advent involved in the company again. If you remember, Advent was the one who owned a 38% in the company when LULU went public in 2007 --- Advent then sold a 12% interest at the IPO and then closed out its entire stake in 2009 for a handsome profit. So now that Advent is back again, I think this is a pretty strong endorsement that LULU's issues are fixable and that its long-term growth story remains intact. Along with mgmt's $450 milion buyback program, I think this low $40s is likely a floor on the shares.

Besides this restructuring and PE interest, I think the reason that I'm more convinced about LULU now is that traffic finally rose to the mid-single digits after several quarters of decline. I realize that the avg basket is still short in every category but a lot of it is due to the fact that the company didn't have enough seasonal products - the new mgmt team is working on changing the core assortment more frequently.

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Member Avatar wardo74 (< 20) Submitted: 10/22/2014 11:34:15 PM : Outperform Start Price: $41.51 LULU Score: +24.84

I asked my 12 yr old daughter what is popular in clothes right now. Lululemon is one of her favorites!

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Member Avatar RugbyViking13 (90.10) Submitted: 10/22/2014 8:21:25 PM : Outperform Start Price: $41.51 LULU Score: +24.84

If you don't know you better ask

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Member Avatar TMFBuck (74.62) Submitted: 10/7/2014 10:44:56 AM : Outperform Start Price: $41.17 LULU Score: +26.45

About $1,800 per sq. ft. That's way, way above average. And they've got plenty of room to grow.

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Member Avatar aqha053 (< 20) Submitted: 9/26/2014 5:15:40 PM : Outperform Start Price: $42.56 LULU Score: +22.45

Lots of room to go back up

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Member Avatar buckazoid (92.33) Submitted: 9/11/2014 10:30:47 PM : Outperform Start Price: $43.68 LULU Score: +21.22

This stock has gone down a lot, but fundamentals have been strong enough to support my Outperform call

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Member Avatar TMFbuild (43.86) Submitted: 8/25/2014 7:37:26 PM : Outperform Start Price: $40.87 LULU Score: +29.96

A growing business and cheap valuation. They entered into a niche market by targeting women. Recent glitches by management has pushed the stock south. But its balance sheet and earning potential remain strong and at this price, it is a Buy

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Member Avatar TMFSTX (97.55) Submitted: 8/25/2014 2:37:16 PM : Outperform Start Price: $40.89 LULU Score: +29.76

With the internal bickering mostly out of the way, it's time to get back to selling yoga pants. I think LULU is going to sell a lot of yoga pants

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Member Avatar ayekappy (< 20) Submitted: 8/18/2014 10:37:10 AM : Outperform Start Price: $38.89 LULU Score: +35.18

Nike takeover

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Member Avatar mario17 (81.10) Submitted: 8/13/2014 10:25:27 PM : Outperform Start Price: $38.92 LULU Score: +33.92

I think that at today's prices, investors who buy the stock are getting a top growing brand with a still big addressable market (international opportunity is still untapped) at a good price. Although the company may still face some problems because of the product-quality issues, I think Lululemon will learn a lot from its mistakes and will come ahead as a better company, and if it retains its status as a lifestyle brand, which I think it does (Lululemon ranks fourth in sales per square foot of space among brick and mortar retailers), once it does, it has what it takes to continue growing and protecting its margins for many years, resulting in an excellent formula to outperform the S&P 500.

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Member Avatar TMFNinjaPanda (59.64) Submitted: 8/11/2014 4:19:03 PM : Underperform Start Price: $40.41 LULU Score: -27.88

Overpriced products - It's hard to deny how comfortable yoga pants are, but I doubt people will keep paying $98 for one pair. I think that soon Gap or Uniqlo will come up with products with the same quality but much lower price points.

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Member Avatar TMFFlygal (99.45) Submitted: 8/11/2014 1:28:25 PM : Outperform Start Price: $40.43 LULU Score: +28.11

I pick up a small real world position today. the multiple has come down a lot and I think there is a chance that the company will turn around with the controversial founder being eased out. People pay a lot for the clothes, because they love them.

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Member Avatar TMFCavalier (64.87) Submitted: 7/16/2014 1:55:15 PM : Outperform Start Price: $38.22 LULU Score: +38.04

I think this is a great brand that has come under some extraordinary pressure over the last 12 months. Between product recalls and turnover in management and the Board, LULU has gotten beaten down in the market. I think this is a resilient brand with loyal and passionate customers and LULU will find it's way back to strong growth. More and more people adopting a healthy lifestyle won't hurt either.

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Member Avatar DLester78 (74.98) Submitted: 6/13/2014 11:49:43 AM : Outperform Start Price: $36.90 LULU Score: +40.95

tough times sharpen all edges. This company needs a few hard knocks to re-focus. Hopefully the board gets its act together and they find a suitable replacement for CFO. If I ever meet the man who invented yoga pants the beers are on me.

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Member Avatar flomomomo (< 20) Submitted: 5/31/2014 5:18:57 AM : Outperform Start Price: $44.73 LULU Score: +13.99

great company & great among women

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Member Avatar motto1628 (48.97) Submitted: 4/8/2014 4:30:01 PM : Outperform Start Price: $53.24 LULU Score: -9.43

CEO is reputable; great brand

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Member Avatar SES0 (20.47) Submitted: 4/5/2014 9:49:07 AM : Outperform Start Price: $54.06 LULU Score: -10.81

With LULU focusing on their direct to consumer business for better margins, and with expansion of their line, if they can also transition to high quality athletic wear for men, they should outperform. Their mix of quality and fashionability is above the curve. They deserve their higher margins.

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Member Avatar gallagherr85 (< 20) Submitted: 4/1/2014 2:51:18 PM : Outperform Start Price: $52.62 LULU Score: -6.79

New CEO in place who used to be the CEO of TOMs and has held a management position at Louis Vuitton (experience with high end brand). Growing popularity among young women, and new mens and kids lines have been doing well.

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Member Avatar TMFJMo (72.40) Submitted: 3/27/2014 4:28:16 PM : Outperform Start Price: $51.27 LULU Score: -5.78

Here's a link to my slide deck in Dropbox:

https://www.dropbox.com/s/o10p8d07b67ke69/Lululemon%20Deck.pptx

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Member Avatar konok1973 (82.73) Submitted: 3/20/2014 12:54:01 PM : Outperform Start Price: $68.28 LULU Score: -56.58

New line of clothes, cheap, growth

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