Was also in a modell's looking for golf balls and saw all the Nike and UA. Talk about competition. It's all on tacks on top of itself, right next to $10 Reebok sweatpants and $12 Russell Sweatshirts.
I have no idea how long LULU will reign supreme but there is NOTHING it its way right now. I was in the store for 20 minutes and saw three guys and women shopping for their guys, buying men's merchandise. I can't wait to see these earnings in a few months, I really can't. One guy actually bought the ugly, black, ribbed jacket. All brand.
....Said the manager of my lululemon when I asked her how the holiday sales had been going. Not sure that it means too much in the grand scheme of things but sure was nice to hear today.
The port delays...as per the conference call, they guided lower to account for the port delays. They have also re-routed future shipments to Vancouver so they're leaving Long Beach and the problems behind. The worst case scenario is priced in already.
Best of luck on the options.
Shorts are trapped. Looking more and more like a close out, no pull back, just up. Lulu has been from 50-60 twice in the past. Both times, straight through into the 60's like a rocket.
Over-exposed brand with lame, advertising agency created slogans and celebrity endorsers in it for a pay check. No there, there at UA.
LULU is three times the brand UA is. Nice to see the market is starting to get it right.
LOL, same thing you said to me in HLF from $40 all the way to $80. Who pays you to troll the battle ground stocks, anyway? If you're advocating on the side they've actually invested, you might want to start looking for a new gig. They can't have much money left, can they Old Sport?
Is Nike an exception? Remember the sweatshop scandals? Is Uggs an exception? Is Apple an exception? Is Chipoltle an exception?
different viewpoints make a market. What I see is an overdone sell off within a decade long bull story at LULU. Brands just don't get better than this. If you spent any time in stores, you'd know what I mean.
Hope you're right about the margins. I guess the cost of the quality fabric is a drag on margins for LULU. Should be an interesting week and than you for the info.
Thank you, Sir. You're pretty cool yourself.
On the PE, most of the time it's prudent to not step too far beyond whatever fair value number prevails out of the analyst community. There are times you throw it out the window. I see this as one of those times.
First, UA tells us the market is willing to "go there" in this industry, at this time. That's probably the biggest factor. A close second is the short float, fuel to lift this into the stratosphere. And another huge factor is the big break we caught with oil.
No one can agree on what the ultimate impact of lower oil will have on the global economy but what every one can agree on is it's good for consumers. Throw in the fact that big firms are changing their view on lulu and you have a combustable mix for quite a run. Next week will be very telling and it very well might retrace. But if you're ever going to play for the second leg and the "really big move" this has as many factors going for it as just about any other I've seen.
AF reported $18 Million net profit. I'm assuming that's across there brands (Hollister, AF kids, etc). Looks like sales were around $1 billion.
How could their gross margins be so good and none of it ends up on the bottom, bottom line?
I'm not in the neighborhood of being even a decent financial analyst. About all I can understand are the big numbers. The two that stand out for LULU and UA are these. Remember, this is the "troubled" LULU still in "transition" with depressed margins...
Under Armour: Revenue: $938 Million. Net Income: $81 Million.
Lululemon: Revenue: $417 Million. Net Income $60.5 million.
I actually kind of like the look of LULU's margins. I know they weren't quite what they were but so what? Now that they're stabilized, it's pretty clear why we're seeing a feeding frenzy. The pricey little boutique with low overhead and high margins can withstand a little margin shrinkage and still look like a way better business model than the golden child.
Don't agree even a little bit. LULUlemon is a minuscule little $6 billion company that won't be impacted at all from those with big exposure in oil. Maybe APPLE but I don't see the oil free falling much longer. Governments are involved at this point and will be twisting OPEC arms all weekend to cut production and end what could become a global financial mess that would hurt OPEC more than cutting production will.
Oil only helps LULU:
The perception is Mom will have more money in her pocket to spend in retail. This will lift all of retail, including LULU.
The product at LULU is in some part, oil based, they will see a savings. How much, I really have no idea but their costs will only go down.
But all of that is secondary to sentiment. The big hedges are buying LULU. I'm sure Advent is out there bulling it and it's working. Maybe a pullback at $65, definitely one at $75 but just minor $1 and $2 back and fills until we hit $65.
All depends on what you believe the market believes. The market believes UA is a global growth stock and assigns it an 80PE ratio. Is that fairly valued? If LULU is truly a global growth stock, is it fairly valued with a 30PE? No way.
I don't see this retracing back. It will find a new range either between $65 and $55 or $75 and $65. The real decision here will be at $65. But until $65, this is in break out mode and breakouts don't retrace. They go sideways, then higher for weeks on end.
In the end, the negative sentiment was way overdone. I'm told a number of the big hedge funds are involved, having changed their view quite positively on LULU's future. It's going straight up because large hedge funds and Private Equity want in and they'll buy whatever those who fought the bottom will sell them.
It always amazes me the number of traders who will suffer through the back and forth of the bottom forming, only to cough up their shares when it finally get easy.
PE expansion i going to be a real problem for shorts in the next six to eight weeks.
The vulture bad mouthed HLF from 40 all the way to 80 when I ripped that trade. Glad he's here...means I'm right.
The more he posts, the more I buy. This stock is a nightmare for shorts. Every conceivable factor working against them, including Jim Cramer.
Who would actually still be short this, at this point? Vulture. LOL.
He keeps saying the customer experience isn't what it used to be. Well we know what happened there. The guy looks like he's been eating three cheeseburger lunches for 22 years and walks in there all sweaty and gross and the lulu girls don't want to go near him. Why would they? He's a disgusting human being. So he takes out the rejection on the stock. That, or he's corrupt. Probably corrupt.
Anyway, it used to be Poser could move this stock. Now he's up against Cramer and the hedge funds buying these millions of shares. Game over, Poser.
A ton of negativity the whole way. Great hold and trade for you, congratulations.
I obviously have to find a reason to press this trade. I see your logic and decision and I've been struggling with it. Ultimately, I believe this company doubles in the next three for five years in terms of the number of stores, sales, etc...and from there explodes into a global rival to Nike and UA, but different. Sort of a fashion/work out mash up as opposed to a pure athletic play, which is what they are. As you said, the loyalty and love of the brand can be seen in the stores so, I'm not really reaching, they just have to execute.
Right now there is BELIEF from the market that UA will achieve similar growth. There is doubt that LULU will. My bet is the doubt turns to belief and the PE ratio expands way ahead of the actual growth as it has with UA and it's 80 PE.
So, we know the market is willing to assign an 80 PE ratio to a growing healthy athletic company. UA has earned it with performance. LULU will have to as well but there is no reason the market won't assign say a 40PE as they wait and see the growth story unfold in the next two quarters.
The next two weeks will be telling.
Great trade, been an amazing ride. I'm holding and adding in the weeks ahead, playing for a much bigger move in the next sixty days.