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Lululemon Athletica Inc. Message Board

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  • texasbroker2000 texasbroker2000 Aug 19, 2008 2:33 PM Flag

    now seriously...

    They have a high P/E and their inventory is the majority of their tangible assets. The upper end retailers are being hurt right now...SAKS for example.

    Lulu is a high overhead operation paying the absolute top of the market rental rates. They do not have much margin for error.

    While a botique operation can be profitable at any given location it's much different when trying to duplicate that throughout N. America.

    There are plenty of athletic wear suppliers and while the styling and quality may be superior whether or not the typical consumer will continue to pay $70 for a Lulu product, when they could buy Nike for example at $40, remains to be seen.

    I'd sell on strength and my investment has been on the short side which I've played since last fall when it was in the $50's.

    I practice Yoga and there's definitely less lulu product being worn in my classes even though several stores have opened up in the area.

    • They are just starting in the US - that has been said before - but the is still not really understood in terms of impact. A good chunk of it was probably priced in, in the 40's, but now we are flirting with the sub 20's. Quite frankly LULU is being punished because its retail and all retail is looked on a problem in markets like the one we have now.

      When LULU is compared with other "high end" retailers like SAKS, etc - it shows the spin which on one hand is somewhat accurate in terms of LULU being at the higher end, but at the other end - SAKS and LULU really are not comparable. I mean what is the growth potential of SAKS? Lets compare that with the growth potential of LULU - when they are just entering the US market - there is no comparison. Quite frankly I'm not sure how people don't see that.
      You can say that LULU is overpriced, over hyped, and in a high-end boutique category - but really have a look at the financials. Take a close look at store growth, same sale growth, general sales growth. Think about the current economic environment that this being achieved in.

      The problem is - where is this stock going.....it looks like its going down further - but this is because the market has a long way to go (down) and unfortunately for LULU - its lumped in together with the "loser" retail sector.

      In the final analysis - if I didn't own it already (and I was wrong and bought it too high for this run) I would be accumulating and this is a very good price to start doing so.

 
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