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Something doesn't add up at Lululemon (LULU -2.1%), according to analysts. Though the retail...

Something doesn't add up at Lululemon (LULU -2.1%), according to analysts. Though the retail chain thinks it can double its presence in the U.S. and launch successfully internationally, doubters predict the company's products have a price point that is too high to allow the projected growth to occur smoothly. The big LULU question: Just how big is the market for $60 tank tops and $90 stretchy pants?
Comments (9)
  • Dogpound
    , contributor
    Comments (141) | Send Message
     
    I hope that market is massive.
    20 Jun 2013, 12:28 PM Reply Like
  • KCphaeton
    , contributor
    Comments (246) | Send Message
     
    LULU does not have a lot of store saturation yet so they should be able to grow. They are also entering the Men's market. So they will be able to get some new business there. But will men shop in LULU? Or will they be inhibited from entering the store? Most men feel uncomfortable shopping in Victoria Secrets. So will they enter a store that is 92% womens gear?

     

    Will purchases for men be by their Wife and or Girlfriends?
    20 Jun 2013, 12:37 PM Reply Like
  • imac007
    , contributor
    Comments (485) | Send Message
     
    This isn't about price, it is about value. Who would spend $700 for a phone, $300 for a music player or over $100 for sneakers?

     

    My teenage daughter insisted on spending $90+ for lululemon pants. She is frugal. She was right, that was 7 years ago and the pants till look good. I have severe doubts that the low end knockoffs from discount retailers will meet that grade.

     

    They reek technology company, not garment company, and so do Nike and Under Armour. Calvin Klein and G-III apparel settled out of court for patent infringement.

     

    They are synonymous with quality yoga gear. Brand names come to represent their market. They have that iconic status. The price falls into the "I deserve a treat" range. A massage might cost as much and feel good, but, those pants can make the owner feel good every time they put them on. It's about an experience. Yoga is an experience and they are more closely linked with that community than rivals.

     

    Nike runners are a fashion statement to middle and upper classes. To the ghetto kids wanting to get out of their neighborhood, through basketball, they represent the tools of their trade. The same has happened with lululemon. They occupy a fashion niche as well as being the apparel of choice for practitioners.

     

    The barriers to new store growth are minimal with plenty of room for growth, here and down under. The only concern I have is about their foray into men's apparel. That said, heavy adoption of yoga as part of professional athletic training, will probably facilitate adoption. Adam Lind of the Toronto Blue Jays, has been plagued by back problems. Since taking up yoga, those issues have not re-surfaced. To date this month, he is batting over .400. Commentators are noticing, calmness, better concentration, flexibility and poise.

     

    This is a growing niche market and the first to market, leader of the pack crown belongs to them and should translate into momentum. You need to look at their Board of Directors. This is serious collaboration, from the CEO of Coach, to others with serious involvement with Facebook, Google, American Express, Victoria Secret, and other design heavy weights. The visionary of the company is still CEO.

     

    With over $100M in the bank and no debt, building more stores and investing in their astoundingly successful e commerce site should be their priority. They are already the 3rd most successful retailer in $/sq ft.. The formula is working.
    20 Jun 2013, 01:24 PM Reply Like
  • KCphaeton
    , contributor
    Comments (246) | Send Message
     
    Great reply to my comments. Thank you.
    20 Jun 2013, 04:36 PM Reply Like
  • markb
    , contributor
    Comments (421) | Send Message
     
    Regarding KC's question, I'm a guy and I recently bought some golf shorts at LULU. I love them! Plus the experience was great...cute girls in tight yoga clothes being super helpful. My only complaint was the limited number of golf-type styles. But I also have a pair of yoga shorts from there that I use for general workouts. My friend and I went in there with our wives and we couldn't drag them out until they each spent over $200. In summary...its gonna work with men, once they find out about it. PS I would never go into a Victoria Secrets...that would make me squirm.
    20 Jun 2013, 02:17 PM Reply Like
  • schneile
    , contributor
    Comments (6) | Send Message
     
    I think men will shop there provided the environment is tailored to them. Obviously the "Lulu scent" in the air will have to be changed, and the brand focus shifted exclusively to performance with appearance and style a secondary emphasis. I'm trying to think of other brands that have executed a successful brand extension by gender; Banana Republic comes to mind. But Banana hasn't split into freestanding his/hers retail; neither has GAP, Eddie Bauer, etc.

     

    With that said, I'm seeing a lot of men out there running 5Ks and showing up at complimentary yoga classes in their Lulu.
    20 Jun 2013, 02:18 PM Reply Like
  • JohnnyAmazongb
    , contributor
    Comments (21) | Send Message
     
    I shop at Lulu and there are plenty of men in the stores (mostly with their wives). Once introduced to the technology, men buy the gear.. just one problem, there aren't currently enough Lulu products to satisfy the market for men, so this is an area of growth for Lulu.
    20 Jun 2013, 02:19 PM Reply Like
  • KCphaeton
    , contributor
    Comments (246) | Send Message
     
    I was thinking the same thing as UnderArmour is doing the exact thing with women's wear so I see them as entering the NKE space too.
    20 Jun 2013, 04:38 PM Reply Like
  • trying to trade it
    , contributor
    Comments (15) | Send Message
     
    I agree with imac007. Most people don't get lulu and I'm glad, when they do time to exit. Buy before the masses sell when they buy. :) I think the na sayers should put their money where their mouth is, bet the farm. No one will ever buy yoga gear, no one wants to be in shape, women don't spend money. The company way over valued at 35 P/E's.

     

    The short squeeze will be sweet ( as it has been from time to time), I have my LEAPS (calls) and am ready to buy more.

     

    The stock is a great money maker! Puts and Calls. You need both sides to make $$$. Good Trading!!
    20 Jun 2013, 02:19 PM Reply Like
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