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The Company is a designer and retailer of technical athletic apparel in North America.
Momentum trade after strong guidance. Sell ahead of earnings in March. (Not a real money trade)
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.
I asked my 12 yr old daughter what is popular in clothes right now. Lululemon is one of her favorites!
If you don't know you better ask
About $1,800 per sq. ft. That's way, way above average. And they've got plenty of room to grow.
Lots of room to go back up
This stock has gone down a lot, but fundamentals have been strong enough to support my Outperform call
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
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
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.
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.
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.
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.
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.
great company & great among women
CEO is reputable; great brand
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.
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.
Here's a link to my slide deck in Dropbox:https://www.dropbox.com/s/o10p8d07b67ke69/Lululemon%20Deck.pptx
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