David Tsao

Lululemon Athletica: Heading for Single Digits

I couldn't agree with you more. My wife told me about the LuLu store a year ago when we were crusing through the mall, and my first question to her was, "This store only sells yoga chlothes?" This stock turned up in my overvalued screen the other day, and I considered a short position so I asked one of my friends who has used their products what the deal was. This was her response:

----
"1) Yoga wear is a fad that is dying with general public, only people practicing yoga will continue to buy and wear it
2) For those who really ARE into yoga, lulu clothing is the yoga gear of choice
3) If they expand to the US, I think they will really appeal to those already practicing yoga, so there is huge potential since it seems as though "everyone's" doing yoga
4) However, Yoga participants have peaked in numbers in my opinion. I think those drawn to yoga have already gotten into it by now and those who aren't into yoga will probably never get into it, so I don't see a lot of "growth" there after they've opened up their US stores and the yoga-ers have made their purchases.
5) Lulu got a mention in Oprah about a couple of months ago (always a good thing) promoting it as great lounge wear or casual wear .
6) There are tonnes of other yoga wear choices and brands although Lulu is the "elite" brand of yoga wear (not a good thing)
7) There is potential for them to continue to grow if they work on new and fresh styles. Right now they seem to be relying on the same basics.

As for me, I own two articles of Lulu that I bought in 2003. Do I see myself buying anymore lulu down the road? Doubt it - maybe one more item at most - I think they're too pricey"