Let us know more about LULU and why you like them. Here are a few thoughts of mine.
Regarding the brand, I think it is in great shape in the higher end workout gear doubling as normal day time attire for many women, even when not at the gym or the yoga studio. Many of the women I know in Chicago swear by the brand. If I’m not mistaken you are around Santa Monica which is likely the single hot bed for LULU attire on the planet (I used to live in SoCal and visit a lot still).
So, I believe the brand has strength. The question is will the strength continue. You seem to be quite optimistic so please let us know what you think.
The company’s fiscal year 2017 ended January 29th. They pre-announced very tight guidance so we know where rev and EPS will fall.
Looking at the past four fiscal years, from 2013 EPS*** bounced around from 188, 194, 166 to 191 (cents per share). Presumably FY15 was hit hardest from the “see through pants” problem.
In 2017 they will earn $2.22 per share yielding 16.2% growth over last year and a PE of 30 at today’s price. Revenues will be $2.062B which is about 13% growth.
That is about all I know on LULU. Would be interested to hear others thoughts.
Take care,
A.J.
***In my cursory glance, LULU only reports diluted EPS which I believe is GAAP (not 100%).
I invested in LULU from August 2011 to December 2015 so I have my opinions about the lululemon. Back then I was very much interested in retail and even started a board in 2006 Emerging Retail and Apparel which is quite dead by now:
lululemon had a fantastic story and a loyal following that was textbook perfect. Then it unravelled. The founder and CEO, Chip Wilson, left, they went through several CEOs, Chip Wilson said some stupid things about women. This was happening while the brand was transitioning from niche to street-wear which was great for the brand. What I would look for before anything else, is to see if the painful transition from startup to grownup has been accomplished. If it has, there are lots of markets to conquer for lululemon.
On the macro level, retail is having a hard time with malls failing, internet commerce disrupting bricks and mortar, underemployment, potential trade wars. UnderArmour and Sketchers are like canaries in a coal mine. I would currently restrict my retail investment to online and off-price: AMZN and ROST.
As far as online sellers, I’m thinking about looking into specialty sellers. I’ve never found Amazon’s price and/or selection to be nearly as good as a good vendor that specializes in a particular area. I don’t think it’s publicly traded, but I can’t imagine Amazon matching Rock Auto (rockauto.com) on price or selection. The only drawback I’ve found with that particular vendor is their charging a separate shipping cost for each location they ship from.
ROST and TJX are the top off-price retailers. I’ve shopped at Ross Stores but never at TJX so I can’t compare shopping experience. When reading comments to articles the impression I get is that TJX is somewhat more upscale which defeats the purpose of off-price. Each company has its fans.
Denny said, “Ross Stores promotes a treasure hunt atmosphere and maybe that’s what’s making the difference.”
I’ve noted in the past on this board that I own LULU, but it is a small holding that I don’t carefully track. As of today, I’ve never visited a LULU store and own no LULU apparel. I do take Pilates classes – for which LULU apparel would be appropriate – so that might change this year. In any case, I’m suggesting you take this post with a grain of salt since I’m not an active customer…
It is my understanding that LULU has embraced the “treasure hunt atmosphere” through limited runs of certain apparel. If you see something you like, buy it now, because it probably won’t be on the shelves the next time you visit!
I think that’s part of the investment thesis. Maybe not a huge part, but a noticeable part.
It is my understanding that LULU has embraced the “treasure hunt atmosphere” through limited runs of certain apparel. If you see something you like, buy it now, because it probably won’t be on the shelves the next time you visit!
I also heard that while I was invested in LULU. This strategy also reduces items on sale buttressing gross margin.
Both have come through the screens in the past. The main difference is that TJX has a foreign element which complicates the picture. I have a slightly cautious investment in ROST because AMZN seems to be steadily trampling everything in retail, even stores previously held to be immune.
