If a company does a tax inversion by getting LULU to buy that company, I wonder who possible candidates could be. This is no small undertaking and could damage a brand.
I'm aware of what inversion means. We're saying a U.S. company should invert thus acquiring LULU, a foreign company, and moving headquarters to Canada.
A tax inversion is where a US company is acquired by a foreign company so that overseas profits can be repatriated at a lower tax rate than would be possible in the US. (in the US, it is the difference between the domestic rate and the foreign rate)
LULU has negligible overseas profits.
Priced at a $6 Billion market cap, LULU is not staying here very long.
Shorts think it's a one time fad that is about to go through some very difficult times where sales decrease significantly, stores close and the market cap gets cut in half.
Or, this past year was a natural pause in the growth of a multi-national brand that is on it's way to much bigger and better things.
Many funds have taken the wait and see stance. But as this climbs through the low $40's, the get on board the long side gets increasingly more difficult to resist. It looks to me like Mr. Market is starting to turn in favor of the growth story and that momentum could very well push this through to the mid-$50's very quickly as buyers try to catch the train before it leaves the station...and of course, the shorts run from the burning building.
Thanks for the update. Any time I go into the stores, they are never mobbed but there always seems to be activity at the cash register. Given the mark ups, it doesn't take many to keep these boutiques profitable. If only there were more of them...lots more...
To add some color here, my wife and I were in Vancouver on vacation last week. We went to the new flagship LULU store location on Robson Street, because she loves LULU products. The store was enormously crowded, and shoppers were buying like crazy. (I watched the register while she tried on clothes.) I don't know what other locations are doing, and there was a half-marathon in town this past weekend, but when we returned to our hotel room, I bought a few hundred shares of LULU for her IRA just based on what I'd seen. My wife says the new styles are very attractive, FWIW. Incidentally, we walked past the store on our second day there, and it was still very busy. GLTA
The short thesis is rooted in the notion that beefed up female athletic offerings from competitors would crater sales. A good quarter BEFORE the new lines and designs start hitting stores in the fall, would be a death blow to that whole camp of people.
I think it's happening. Yes, retail has rebounded but this is a special case due to the enormous short interest here. They are betting on falling sales, quarter after quarter. Enough of this quarter has transpired for that answer to be known. And while I'm in no position to hear any whispers, I've traded long enough to know that it happens all the time and I do think it's happening here.
I think we may see $53 before earnings.
i would say that lulu is moving back up with all the retailers, after getting pushed down due to margin concerns at other retailers. lulu already took the hit at the last conference call, so my guess is that expectations have been lowered enough that they will be able to get over that bar. i'm not looking for fast appreciation, just looking for it to be between 40 and 44 between now and the next conference call. ANY good news would send the stock moving up fast, but i think it they need a good earnings report before it moves above 43.
Indexes blasted higher today for whatever reasons.
I still think a powerful short squeeze of 20-30% is in the works here. Notice how the stock price just stops moving at op-exp price points last few weeks.
everywhere you go all you see is athletic wear. and lulu has just scrached the serface as far as locations. they have a real chance at big growth if they get it right. i will hod lulu far at least 5 years and hope my thesis is right.
I wonder if news is leaking that this quarter sales will beat the lowered estimates. CFO said they lowered guidance out of an "Abundance of caution." In other words, could just as likely go the other way as far as he was concerned.
Long winter, huge percentage of stores in cold weather areas. Men in LULU, everywhere. Would not be at all surprised if what we're seeing is a reaction to leaks that things are going well at LULU.
The shorts have to be feeling shaky. This stock sure didn't seem to like being below $40.