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Lululemon Athletica Inc. Message Board

  • indian8788 indian8788 Dec 18, 2012 3:00 PM Flag

    Lulu vs Coach

    Coach: Mature brand, 16.5B Market cap,4.8B in revenues, 21% margins, 1.05B in net income, 2.1% dividend, 750M CASH.

    Lulu: Young Brand, 11B Market Cap, 1.3B in revenues, 18% margins, 220M in net income, no dividend, 500M CASH.

    How is Lulu a good buy with 1/5 the profits of Coach, no dividend, and major competetion from UA aand Nike, when it is trading at 66% the value of an ESTABLISHED brand like Coach? Where is the value.

    It would take growing at 40% for another 7 years just to MATCH COACH's revenues and profits. I think we can easily say not going to grow at these rates for 3 years, let alone 7.

    Getting to that time where the stock falls all over itself like NFLX, CMG, and GMCR did. It's a market, Things get overcooked.


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    • Ok rookies, all of you!.
      -expanding to Europe and just beginning to in Asia(huge market)
      -expanding their product line from Yoga wear to a new Running gear.
      -expanding their product to meet needs of the other half of the wear(can you say huge mket too!).
      -a couple other points which escapes me now.
      Ok. you get it now.!!.

      • 1 Reply to reallynobs
      • reallynobs, using exclamation points doesn't make your point. Secondly, just because a company enters a new line/begins a new line(such as your example of entering new markets in ASIA/Europe/Men's) doesn;t mean it will take. To Asia and Europe, Lululemon is nothing. Lululemon will be starting from scratch over there, asking for $100+ for a pair of pants.

        I get it that in America there are enough stuid people to pay up for a pair of Yoga pants, but outside of America, it doesn;t quite work like that. Also, regarding the men's line, I see Lululemon having an extremely hard time fighting the tremendous growth/popularity in UA along with products from Nike, adidas, etc. How is Lululemon going to get me to walk into their store when I already buy UA products and feel great in them? Not just me but a growing number of people day in day out?

        Not such an easy question to answer and just using exclamation points does not solve the issue nor does it account for the factor that this is ALREADY being priced in, meaning that if it does not go as planned, which is most likely, down she goes to below 3B. Once this puppy stopps growing at 30%+, like air going out of a popped balloon.


    • You forgot the most most important factoid, that trumps all your other arguments: LULU plans to DOUBLE store count

      Sentiment: Strong Buy

      • 1 Reply to txplunger
      • TXplunger, just think for a second. How is that 1)not already factored in at this point 2)more stores means more expenses while not DEFINITELY more revenues. Just opening more stores doesn't mean more money; there is more risk a well.

        Yes, its healthy for the company to be doubling store count, but its PRICED in more than enough by the markets.

        Really think about it, why would a real investor buy into Lululemon at these prices when they can get a company earning a billion dollars for just 66% more? You get 4X the profits for just 66% more on your oney. Tell me how that works well for Lulu long term.

        I don't believe in calling tops or bottoms for stocks, all I care about is when they get in to clear terriroty of extremely overvalued or undervalued and then I start dipping in either buying(undervalued) or shorting(over-valued) and Lululemon is getting there for me. No reason it can't go higher(it is the market), for which I will then take the oppurtunity to start averaging a short in.


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