Lululemon athletica inc. (LULU)

Too far too fast... love this company long term but not through the holidays this year.- although I'd say that for almost any retailer right about now.

Aggressively hired during the recession

next round of completely overpriced stocks. companies are overextended in their balance sheets & stock prices. Expect them to underperform the S&P 500.
VCI (already existing pick), VPRT, NETL, PAY, BLKB, LULU

LULU
LuluLemon
This company being valued in the Billions is retailer of overpriced yoga equipment and clothing. This is a fad trading at a valuations that demands this fad continues to grow rampantly – yet the comparable numbers don’t look very good. At this valuation there is little (no) room for error and I don’t feel Americans are going to be purchasing new $100 yoga mats and $80 yoga shirts. Once the fad passes, this will be a $1 or $2 stock. Why pay $100 for a spiffy yoga mat when you get them at Target for $9.99. And if you are one of the few who loves to buy $100 yoga mats, I am assuming the need for a second isn’t an often occurrence.
Profile:
Lululemon Athletica Inc. engages in the design, manufacture, and distribution of athletic apparel and accessories for women and men in Canada, the United States, and Australia. The company’s apparel products include fitness pants, shorts, tops, and jackets for healthy lifestyle activities, such as yoga, dance, running, and general fitness. Its fitness-related accessories comprise an array of items, such as bags, socks, underwear, yoga mats, instructional yoga DVDs, water bottles, and headbands. The company sells its products through its retail stores, as well as through independent franchises and a network of wholesale accounts that includes yoga studios, health clubs, and fitness centers. As of February 1, 2009, Lululemon Athletica Inc. had 103 retail stores, including 42 in Canada and 61 in the United States; and 5 franchise stores, including 1 in Canada and 4 in the United States. The company was formerly known as Lululemon Corp. Lululemon Athletica Inc. was founded in 1998 and is headquartered in Vancouver, Canada.

The stock trades at :
9 x book value
4.5 x sales
44 x earnings
1.55 Billion Market Cap

The company has no debt and $1 per share in cash – no red flags here but I am willing to bet they will need this cash in the future as operations start to decline.

Quarterly earnings growth YOY = negative 17% (this will improve but it sure better at 44 x earnings)
The cash flows don’t support this valuation.
The future business outlook doesn’t support this valuation.
The economic moat is non existent.
Go to their website: http://www.lululemon.com/

In my opinion, the men’s apparel is ridiculous (and that’s being kind)

This is not a situation where I think the company is going bk (like I do with Moodys) – but I feel that the stock is grossly overvalued. Any errors moving forward will deflate this bubble stock quickly. Otherwise, I expect a slow grind lower over time.
High End Target = $10.00

In real life :
I am short with $25 puts - bought at the money. I added to this position on the way down including at the current price on Friday at $22.

Downthumb. Nominal cash flow. High valuations. No debt. High margins. MS lowered passive stake in July by 50%.

Shamelessly copied from TMFmbob: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=249623&t=01000000000214846910

Crazily overvalued retail stock P/B of 8 and P/e near 40. Way way way too high for this consumer environment.

Same store sales have been getting slaughtered (8% drop yoy) and gross margins fell dramatically from 53% to 43%. They can't keep adding stores forever to mask their real problems. Don't believe the growth story it's all new store driven

to make matters worse management doesn't seem to care based on their comments. They actually seem to think they are doing well. That means they aren't likely to try to fix the problems.

With earnings coming up 9/10 they seem set up to disappoint

They probably will stay business but this should be more like a sub 10 dollar stock not a 20 dollar stock.

http://zachstocks.com/2009/08/lululemon-athletica-alarming-trends/

a good yoga company

All sizzle, no steak? Back to the well? History repeats itself? I dunno, I'm too demoralized by my recent 260 pt redthumb loss on this to think of a compelling pitch.

When you have a brand thats worn by preteen, teen, young adult middle age and elderly...... how can you go wrong. this stuff isn't just yoga folks.

Okay if Free Cash flow isn't enough. And there is no long term debt load compared against other companies and its industry. LULU has a grass roots marketing scheme that is really taking root, as Yogis aren't the only ones wearing their gear. Gym rats, runners, and walkers. Women love the stuff for the way it makes them look, functionality and it lasts a long time.

This clothing lineup is the hottest fad going that I have seen. You see them everywhere once they are established in that market and it is far from limited to Yoga goers. I've seen this clothing line worn in some of the trendier night clubs in the city. If it gets a strong foothold in the USA it will explode.

I live in Vancouver BC about 10 blocks away from Lululemon Athletica headquarters. Their Yoga pants are hugely popular with women of all ages here in Vancouver. My wife has 4 pairs and her sisters and girl friends all have pairs as well. I am told these are the most comfortable athletic pants women can where. They are also very popular with men but for different reasons. My friend best describes them as a push up bra for the derriere. Lululemon has an extensive clothing but there athletic pants are a real stand out product.

at this point i think its fairly valued at around 12-13, they still have a massive market expansion available to them but i don't see it growing any further until the consumer market recovers (hopefully in the later part of 09)

Too far, too fast. At a P/E of +20, Lulu's faddish characteristics are just too risky to take on. Yoga seems to have peaked, anyway.

LULU has a very strong chart and bucked the crummy upgrade it got. I belive that the upgrade should have been with a price target of $12.00! Since I am a self taught analysts due to the fact many teaching in Grad School about Finance bothered me I went on a different approach to valuation of stocks. I will post an only info when I feel it is crucial.

about to explode! Huge following, great niche, great margins, no debt.

Oversold at this point, 0 debt, poised to make a run.

Attractive at this price. Great record of growth. Now at a p/e of 12. Well run and in demand.