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Lululemon Athletica Inc. Message Board

  • gregbent gregbent Nov 23, 2011 2:06 PM Flag

    Growth Ahead - look forward people!

    FACTS: at the Beginning of FY12 (per 10K)

    Canada Stores: 44
    US Stores; 82
    Australian: 11

    Store count growth in 2011 and 2012, approx +25 per year (almost all in the US)

    By year-end 2012 -- Canada will drop to 25% of the store mix.

    Canada Generated 52% Revenues in FY11 or $370M

    There is a potential for $3.7B in annual Revenue in the US - given the 10x higher population. and a store count over 400 stores

    Revenues could climb 5 fold !!!

    Then add in potential for Europe (and more Int'l markets) and their second concept Ivivva and you get the picture.

    Growth, Growth and Growth.. with Canada becoming less and less important.

    Even if discount the US potential in 1/2 the growth is still massive.


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    • By the way, I appreciate the civil response. But, I could point to any number of large cap tech companies with significantly lower PEG ratios (which handles the growth argument) and much better balance sheets to weather a financial storm.

      I think too many on this board and on the Street are disconnected with the pain that most Americans are feeling these days. Well, the "high end" consumer is already taking a big hit from the wealth effect (stock market declines) and will continue to from the uncertainty. Plus, a lot of the "high end" consumers are wealthy financial services people. Look at what is happening on Wall Street right now. Goldman is dumping partners. Layoffs are ratcheting up, just in time for the holidays. Bonuses will stink because there would be a mutiny on OWS if they were big. Point is, the high end consumer is going to get hit in 2012.

      Hopefully, things will turn out better. I don't want the economy to go into recession and people to feel pain. But, I do want to make sure all of you carefully consider that it is not only possible but probable, so that you don't find yourself in a dark place when it happens.

      Missing a little upside isn't great. But, getting hit with all the downside and then having to make up ground in a deep recession is NOT where you want to be. I strongly encourage you folks to look at EARNINGS YIELD to figure out where to put your money. Many dividend and defensive stocks are overpriced as well...

    • How about GOOG?

    • I respect your opinion, but I do agree more with greg. I just want to say aapl is not a fair example. There is strong sentiment that Apple is Steve Jobs and with his passing, that leaves apples future and direction very unclear. If Steve was alive and healthy today, apple would be trading at much higher multiples.

    • Greg:

      Apple is now trading a a FE multiple of less than 11, despite 100% earnings growth. Plus, it has $80B in cash. Do you really think investors are going to put new capital to work in LULU which has a forward PE of 41 (assuming no recession) and very limited cash ~$275MM?

      You have to look at the broader context.

    • you are funny.

    • you are funny.

    • Try GAAP EPS...

    • Yes, I did - check your facts !
      EPS Cashflow
      FY08 $0.22 $38 Million
      FY09 $0.28 $46
      FY10 $0.41 $118
      FY11 $0.81 $180

      ** they were Free Cash flow positive too ! ie. they funded their CAPITAL expenditures.

    • I don't that they are going to get the same store saturation that they got in Canada. There are several other players moving into the space (e.g. Athleta), and the yoga boom is getting a bit long in the tooth -- women are moving on to other things.

      LULU hasn't taken off with the college girls the way that it did in canada -- hence the lower $PSF numbers here. Likewise, the student infatuation with lulu is fading in Canada.

      Finally, do you REALLY believe that they can keep their $PSF growing to the point that they are the highest in the industry for the next 30 years? Because that's effectively what you are betting on at this price. Sears and Benetton were killer retail at one point...

    • So pay for it when it happens, not when it might, if everything goes well, happen...

      In the real world, that's what investors do. They pay for performance. Not the story that there might be performance.

      Revenues could also drop by 20-30% as they did in the last great recession. LULU could become unprofitable.

      Those are more likely outcomes than revenue increasing 500%...

      Another point of fact, it takes time and cash flow to open stores. As the recession worsens and the currency further declines, LULU will have LESS FCF, further inhibiting its ability to open new stores. At the same time, companies like NKE will lots of cash will be able to target LULU's niche...

      The downside risks are both far greater in magnitude and far more probably than any upside hopes...

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