LULU's revenues $820mm, ANF's revenues $4 BILLION. Does anyone actually think that LULU will EVER reach $4 billion in sales? ANF's 1x sales vs. LULU's 8.2x sales makes LULU WILDLY overvalued. Fair value for LULU is a little over FIVE BUCKS and trapped hedgies will be scrambling for the exits soon imho.
In the last earnings call, it was indicated that LULU wants to have sales as inventory levels increase. What someone else noted, there are no sales!
That is the key versus guidance given. A lot of people waste time on nonsensical number crunching when they should be 'reading between the lines'.
The to make money is not predict where the stock is 5 or 10 years from now. Only long term investors do that. Techstrategy's post are just guesses as to what will happen many years from now. The real information comes from the hints. Anyone who paid attention to the last earnings conference call (not just the transcript) will know what I mean.
These are reasons:
Y/Y growth LULU = 35%
Y/Y growth ANF = 19%
Profit Margin LULU = 19%
Profit Margin ANF = 5%
Operating Margin LULU = 28%
Operating Margin ANF = 9%
Return on asset LULU = 39%
Return on asset ANF = 7%
Return on equity LULU = 39%
Return on equity ANF = 11%
YOY comp store sales trends show decelerating growth. New store SQ is declining as a percentage of total (thus a smaller contributor to growth going forward), earnings growth has been greatly aided by currency appreciation of about 30% since the lows of 2008 (prior to reversing in August, where now it looks to be a 10% and growing headwind).
In response to your earlier comment, it actually takes guts to hold a position that is absolutely not supported over the next 12 months by any traditional/fundamental economic metric. The bottom line is longs are gambling that other longs will continue to play a short squeeze game and that the can get out / liquid before it does revert to fundamental valuation. I don't see that it takes any real courage to "bet" that at some point over the next 12 months this stock will revert to a fundamental valuation and there is ZERO chance that LULU will have strong enough growth and profitability to justify its current valuation on a fundamentals basis.
As long as you position yourself to see through any BS squeeze (which is why LT puts are preferable by and large, although I will hold a mix of ST and LT, OOM and DITM into earnings), you will do very well betting against LULU right now. It is a very good company with strong management, but that doesn't change the fact that it has run more than twice as far as it ever should have because of way momentum plays run...
I heard the same argument when LULU was at $15. Back then it was a 'fad' stock or the classic 'who buys $100 yoga pants'.
What you don't realize is that if ANF And LULU sold basically the same clothing, your argument would be logical...but they don't.
YOu need to look at it as a retail store; athletic brand for women (like Nike). They can triple in the US in stores to reach a reasonable level. They already sell into European markets (online) but choose not to open stores at this time...I think they wanted the system completely ready.