+ Watch LULU
on My Watchlist
The Company is a designer and retailer of technical athletic apparel in North America.
With many growing competitors and a luxury label this company is going to have to prove that this luxury is worth it. Tough sell for exercise clothes.
Recent performance does not justify a premium P/E.
"has hired an executive from U.S. discount chain Kmart to lead its global merchandising and design team."I wonder if they are hoping to get expertise on the cool factor or on the quality factor. If you want to buy the stock, I'd say wait for a blue light special.
LULU is not just bought for athletic wear, it is also worn as a fashion statement, plus they are opening cloth for men. a whole new market segmentLong LULU
Overvalued relative to fundamentals, and qualitatively the company is losing its niche through deteriorating product quality and staff knowledge.
Strong branding, excellent growth, a true stand out in the clothing retail industry
Valuation depressed by yoga pants quality problem and departure of CEO. I believe the problems have been resolved and the stock price will rebound.
LULU's suffering from short term setbacks, but should recover in the next few months, and fundamentals are strong.
I expect to see a bounce on this once the fear over the fed deminishes.
Athletic brands come and go, with few exceptions. Fila, Starter, LA Gear, etc. LULU has a lot of red flags, and may be headed down a well-worn path towards obscurity.
SHORTS BEWARE!!! BETTING AGAINST COMPANIES THAT DISPLAY EXCEPTIONAL ECONOMICS LIKE THIS IS LIKE BETTING AGAINST BUFFET. YOU ALWAYS LOSE!!!I am amazed at how many shorts are so short sighted. Just a matter of time before they get burned. Yes, it trades at a premium multiple but it is well deserved. Shorts are playing with fire here for it is just a matter of time before the stock returns to 70. Here's why:1. ROIC and ROE above 30 consistently. Best of breed, which means management is fantastic at allocating capital (Not just Christine Day). NEVER bet against a company that displays these kind of numbers. You will lose eventually. These companies are like cockroaches you can't kill...they always come back. 2. NO DEBT...they are small and nimble and make course corrections and can make adjustments to their game plan as needed. 3. Even with slight margin contraction due to Luon issues this quarter, they are STILL higher than peers. 4. INTERNATIONAL EXPANSION: They are barely tapping into China and other countries. A major portion of their growth lies ahead. 5. The quality of fabric (with one notable exception) they use and the comfort of their clothes is extremely attractive to men and women alike. Athleta is no competition. It's like comparing a Honda to a Mercedes. People who drive Mercedes will ALWAYS drive Mercedes. 6. What if they make a major CEO announcement in the near future with a CEO who is fantastic and has strong track record creating a great culture and taking companies to the next growth phase. This thing could pop back to 75 so fast that shorts would have to clean their shorts BEFORE THEY EVEN COVER.7. Not NEARLY saturated in affluent markets in the U.S.. Demand is there. I was at Fashion Valley Mall in San Diego yesterday. Lots of people with money shop there. They've got Coach, Michael Kors, Ugg, Ecco stores, etc....BUT GUESS WHAT???? NO LULULEMON....YET....Folks, this is just the beginning of the next phase of the BEGINNING. BE AFRAID SHORTS, BE VERY AFRAID. Bottom line: Never bet against companies that have the Midas Touch...they always have providence and angels on their side
The pants are still see-thru.
3yr rev growth 35%3yr EPS growth 46%should recover after picking new CEO
Had lots of downside with CEO leaving. Now its time for an upturn.
I placed LULU on my caps at $64.71 (PE Ratio 34.98)Conclusion:I just recently wrote a page post on ULTA. ULTA CEO just left too. I considered it a non-event. I believe the departure of Christine Day will also prove a non-event. There was another similarity. Both Companies recently experienced a stock price crash. ULTA’s stock price recovered strongly within a quarter. However, ULTA earnings were going up by 30% while the stock price was crashing. The PE dropped to a historical low for them making the recovery potential more likely. Lululemon’s stock price fell for a different reason – a reason that has caused earnings to go flat. That is a big difference, these comparisons are not the same. Can LULU’s stock price recover? Sure. But it may take longer because they will have to fix a quality problem with their luon yoga pants. To buy at this point is riskier than if one purchased ULTA after their dive – the recovery may take longer for LULU. Perhaps the quality issues will not be a quick fix. If not, earnings may suffer as they recall other products or if they are delayed getting new products to market.So will they fix their quality problem? They appeared to have taken the right steps to resolve those quality issues.http://blogs.marketwatch.com/behindthestorefront/2013/06/10/lululemon-moving-past-pantsgate-crisis-may-deliver-sheer-surprise/"The Vancouver company, known for its Yoga-inspired athletic apparel, said the new batch, being put back in stores throughout this month, has been “re-engineered” “in each and every style to minimize the stretching of the fabric.” It now undergoes 15 different tests and a “sheer-o-metre” developed by university scientists to ensure proper coverage."It sounds like they are on top of the problem. If they can fix the quality issues, then I believe LULU stock price will recovery very strongly. If investors wait for the issues to be fixed, well the price will have already gone up. It is my opinion, this isn’t a bad place to enter a position because I believe they will fix the problems and keep reoccurring problems to a minimum – hopefully ending any new problems with their new re-engineered products.The TTM earnings for the last quarter $1.85 – the same as this quarter due to the flat net income report. Last quarter, the price fell to $61.60 and a PE ratio of 33.30. The low price for this quarter so far has been $63.52 (PE Ratio 34.34) – pretty close and logical range. I placed on CAPS at $64.71 (PE ratio 34.98). My dream price would be $61.60 and under – but without any help from the market, I didn’t wait to place it on CAPS. In my opinion, this is a good price to enter the stock – if one believes those quality issues will be fully resolved. If they can’t resolve the problem (surely they can), no price would be safe. This price is a logical entry point for those believing the issues will be resolved. The PE ratio is near its lowest level since I have started taking notes on them. It has never looked as attractively valued and it does appear they have taken steps to resolve the quality issues.
oversold due to ceo change and recent blips, but still growing with solid products, strong fans, and growth ops ahead
indemand quality products
LULU's stock is getting stretched thin this morning after a great earnings report. The reason is likely the departure of CEO Christine Day, who has given shareholders phenomenal returns after five years at the helm. Her resignation was due to personal reasons, but was unexpected and introduces uncertainty. At this time, we don't know the real reason for her sudden departure.I don't like seeing a great CEO like Day stepping down. But all things considered, I still think LULU will outperform for the long-term.- Lulu's brand and image are absolutely vital. Christine Day contributed positively to the company's appeal to women. I think it will be very important that the Board finds the right replacement for her, and that ultimately they will. LULU is a company with lots of opportunity, which should attract a highly talented pool of candidates.- The black luon pants fiasco is now in the past. The company had the problem fixed, QC'd, and back on the shelves within 90 days (which to me is impressive). There is closer oversight now on quality and technical specifications, which makes me believe that there won't (or shouldn't) be another similar issue that arises.- Lulu has launched new golf and tennis lines, as well as a men's line. This is great news -- they are expanding their product offerings and building off of the great brand they have created. Coach succeeded in this way - creating a 'lifestyle brand'.- Comps were down in Canada (which prefers the luon line that was recalled) but were strong in the US. The company now has a license to operate retail stores in China, which will likely be a huge growth driver.As of right now, the price is ~$68/share and the company expects EPS of $2 this year. The forward P/E of 34 is one of the lowest that LULU has fit into since 2008. I'm a fan at this price.
Sell-off over done. Looking for modest rebound.
Adjusted book value gives the stock a valuation of close to $10 a share. Earnings power value gives the stock a valuation of close to $25 a share. A liberal DCF gives the stock a valuation of close to $60 a share. It is likely that the company does not operate within a franchise that is protected by significant competitive advantages (any company can make the same yoga pants) and thus, the earnings power valuation and value of growth will erode once the yoga pants fad fades and other companies such as Gap and Nike take back market share. The value of the company likely thus falls between the adjusted book value and earnings power value at this point in time, which is significantly less than its current price of nearly $80. There is enough of a margin of safety to thumbs down this pick.
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