Lululemon athletica inc. (LULU)

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

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?

One of the best companies in the world. Once they go world wide then you will see. This is the really deal. There is lines up in their stores.

Being from Vancouver, I understand thier cult appeal among the women of this city. If they can establish their brand in the US as well as it has spread from Vancouver across Canada, this company will soar.

The largest obstacle I see is replicating the love for this brand outside of an 'active' city like Vancouver, often noted for being the most health conscious in Canada. Is the US on the same level when it comes to healthy-living? No. But there are pockets in every city, a certain demographic across the US that does satisfy this niche. The US market will never be as ubiquitously served as Vancouver, but the growth potential there for this company is still mind-blowing.

Once US investors witness the brand in action, they will buy into this stock. If you're still a doubter, take a quick vacation to Vancouver, Montreal, or Toronto sometime and check out how well these clothes make our women look.

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

Not just a yoga wear company and still seems to be very popular. Has a good chance to maintain growth and/or get taken out by larger company.

LULULEMON shoppers don't worry about credit. This is an upscale crowd. Fabrics feel great.

Designs are perfect. Should feel like the first time you stepped into a pair of Crocs but much more attractive.

I'm with RT on this one. If guys realized how good these pants can make their girl look then they would already be on board and buying them as much as they could afford...enter rising stock price...

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.

Niche market with few competitors. Can't beat the price. High upside to this buy.

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.

timely

No debt. That is certainly the way to enter this bear phase. While anyone can point out that the YOY growth is excellent and the gross margins and ROE are better than solid, I have little doubt LULU will outperform based on personal experience.

One a year Lululemon clears out last years stock, overstocks, etc., and they choose a different city for the sale every year. In 2008 it was Calgary, Alberta. They rented a massive venue (the Big Four), hired a ton of temporary staff, set up a dozen or more cash lines, huge communal change rooms and they opened twelve hours a day for 4 days. On day one there were 5 hour, that is FIVE HOUR, lineups just to get in and buy things. Things weren't much better on day two and it wasn't until late in the day on day 4 that you could arrive and make it in to shop without having to wait.

The quality of the product and overall trend in society to a healthier lifestyle suggest to me that LULU is not a passing trend and the current price is a huge opportunity.

Girls love this stuff and they have lots of room for expansion with some momentum.

a good yoga company

Odd name but easy to remember. The business of fashion investing is really just finding the latest trend and riding it's coat tail.

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

My wife says so.

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.