My guess is that they won't get over 25%, and won't take this private.
I think they'll push faster for international expansion, line extensions, etc. They'll throw the original lulu moms under the bus and position it more as a poser yoga brand that would be perfect for VFC to take out at $60 or so.
I've got no position on the company now. Was short for a while (too early, as it turned out).
My reading of the deal is as follows:
Chip was shooting his mouth off, and more importantly, was threatening to sell his stake on the market, which would have tanked the stock. Chip was also behind a slower growth strategy where the brand would stay 'true' to its heritage.
Advent knows the company well, and found this an easy way to buy a large stake in the company. They'll push a rapid expansion, but they may dilute or reduce the brand's image and long-term staying quality. My guess is that Advent will hope to juice sales quickly then dump their stake on all the momos.
The 450mm buyback is to give Chip liquidity. It takes out roughly 10-15% of his shares and gets him below 30%. He's been threatening to sell them on the market.
But the projections were way down. US market is saturated. Plenty of competition; stores are beginning to cannibalize each other (and are already in the best spots). Scarcity formula is wearing thin, and, at some point, there are only so many CRB colors and waistbands that you can stick on the clothing.
The error in your logic, as I've been pointing out for 3 years, is that once every girl had 1 or 3 pairs of yoga pants, there was nobody left to sell them to.
The real issue is that LULU's current customers would be put off by a more corporate branding that attempted to triple sales, and VF already has a strong play in yoga pants.
VFC could pay $50/share and have it be accretive if they can preserve margins and grow sales from $1.6- 3.6b.
Given that LULU can't do this, I'm not sure why VFC could.
Almost all chips shares, and he's filed to sell a lot. Look at SEDAR. Also, no longer on the board. Christine Day sold everything in the 80s, as did the cfo.
Both of you are totally uninformed: Chip Wilson still has significant holdings. All the other executives have nearly zero and sell it as fast as they can.
The true test is whether they exercise options and sell them immediately or let the options ride. In the past, they've unloaded as quickly as possible. Either way, they've got very little skin in the game.
I joined 3 dating sites and reviewed over 3000 pictures of women in the 18-42 age range in a variety of geographies
Yoga pants just aren't aspirational any more!
This suggests that pricing power is going to be weaker than expected, and calls into question the validity of the analyst models.
Put simply -- the 35 year old yoga mom may still want to buy it, but she won't be taking her fashion cues from the 27 year old urban consumer, and will probably start paying attention to price.
I've read every analyst report for the last 3 years...
Store productivity in canada is declining slightly -- the market is saturated. They might open one more store,, but they are pretty well tapped out -- they claim they've reached peak productivity.
In the US, store productivity at existing stores is not increasing, and newer stores are both less productive and not increasing in productivity as fast as the old ones. This makes sense-- they picked the good locations first, and a lot of their stores are really just in-fill. NYC's LULU in times square was killing it a few years ago, but now there are 6 as well as three or four Athletas and a few others of that ilk.
So the revenues can go up while the margins go down. As the company's stores are the most productive in clothing retail, as tastes change, store productivity is more likely to go down than up, impacting margins.
Not saying they aren't selling a lot, but the era of 'Ocean' deciding to take up yoga and going out and buying 5 pairs of yoga pants, 8 shirts, a jacket or two and a few $15 hair ties is almost over, because she's already bought the gear.
The argument is that margins will converge due to the introduction of less productive stores, extra incentives, new qc hires, and structural de-leveraging.
Not to mention that most women already have a closet full of yoga pants, and have enough confidence to go out and try cheaper brands.
Finally, the soccer moms are moving away from the luniform, so new sales will be primarily for athletic use.
No-- the real problem (as I've been saying for 2 1/2 years) is that most women now have a closet full of yoga pants, even if they don't do yoga. Even the cult lulu followers have pretty much all the basics in a wide variety of colors, and don't get nearly as excited about the new stuff as they used to.
The technical term is 'saturated' -- Canada is already done, and older markets in the USA are following.
As I've said before -- they picked up the best locations first. There's an athleta in scarsdale a few minutes away, and the whole yoga moms thing in the suburbs is becoming passe.
We're nearing the end of the secular yoga pants as fashion statement -- you can get lulu-like stuff at lots of places now, and only the hard-core fans are buying.
They pointed out that the sales were strong in stuff bought by older lulu customers, but that new customers weren't buying yoga pants.
Personally, I think that the global fashion trend will change faster than this co can expand internationally, so the earnings estimates 3 years out are highly suspect.
#1) Canada comps were negative. canada is tapped out.
#2) First Q is 1/3rd booked. Black friday was good but the weeks before /since were not.
#3) Christine Day was too tired to bother getting up for the CC (they start at 6 am PST)
#4) existing lulu customers are still buying, but fewer new customers are coming in the door
#5) There are a lot of people 'trying to look like us' in the US
#6) Brand knowledge is zero outside of established market