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.

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/

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.

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.

high COGS...not built to survive a nasty recession.

With executives getting rid of their own stock, I don't see a prosperous future for this company...

Market cap is currently $1.5M. I'm still looking for a 50% decline.

Great company, bad stock. The company is growing pretty well and I know my wife loves their products. However, the stock is simply overvalued. I could see this one in the teens before too long.

same train as UA and CROX

1. Ticker: "retailer of technical athletic apparel in North America"
2. P/E = 62 for a retailer! WOW!
3. "technical athletic apparel"
4. No moat
5. US recession will hurt all retail
6. 50% of outstanding shares are short
7. leg warmers! Seriously
8. Website - look at the Duncan Peak guy - http://www.lululemon.com/
9. Institutionial Owenship, 5% Owner and Mutual Funds all Net Sellers

FINALLY THE MAIN REASON LULU Insider Trading
Total Buys $1,575,000 INSIDER SELLS: $771,298,148
NET TOTAL SALES $769,723,148
Is this a retailer? Or is it a company that was created to unload stock on FOOLS?

From my short ideas/valuation screen

Too Expensive.

P/E ratio of 122 is too high when similar competitors have P/E ratios of 15 to 35.

this is another pig!!! unless they put a diamond worth 500.00 in each pair of shorts they can sell for 50.00 bucks they can tell any seaweed story they want!!! who cares if its there or not!!! yeah the stock would go to the moon if waren buffet said rubbing seaweed on your skin cured cancer but thats not gonna happen!!! if there was money in making yoga apparel!! nike ,under armour, or a mainstream company with deep pockets would control the market place!!! not luluemon athletica founded by a guy called chip!!! this stock is going to zero!!!!

Their main target are 30something women, and if there are buyers beyond that remember the fashion world is fickle and the yoga fad is not going to last. They will have disappointing same stores sales, or how many yoga pants does one need? Just with yoga wear they will not be able to sustain current valuations.