Lululemon Athletica Inc. (LULU): Is This Yoga Apparel Retailer Exciting Now?

Page 1 of 2

Lululemon Athletica Inc. (NASDAQ:LULU) has been a darling of the stock market since the beginning of 2009. Its share price increased significantly, from around $3 per share in Feb 2009 to more than $74 per share at the end of 2012. However, since the beginning of 2003, the yoga apparel retailer has declined as much as 16% to only $62 per share. The sluggish price performance in 2013 was due to the recent recall of its see-through yoga pants. Should investors avoid Lululemon Athletica Inc. (NASDAQ:LULU) after those issues? Or, does the drop in its price represents an investment opportunity for investors? Let’s find out.

Can Lululemon (LULU) Keep Performing in 2013?

Business snapshot

Lululemon Athletica Inc. (NASDAQ:LULU) is a yoga apparel designer and retailer in North America and Australia, operating 211 stores located in Canada, the U.S., Australia and New Zealand. The company has three main business segments: corporate-owned stores, direct to consumers, and other. The majority of its operating profit, $379.7 million, or 79.1% of 2012’s total, were generated from the corporate-owned stores segment while the direct to consumer segment ranked second with nearly $83 million in operating profit. Lululemon Athletica Inc. (NASDAQ:LULU) does not own manufacturing facilities. It outsources the manufacturing to around 50 manufacturers globally, with five manufacturers representing 60% of its total products in 2012. In 2012, the retail experienced a comparable store sales growth of as much as 16% on a constant dollar basis, with about $2,058 annual sales per square foot for comparable stores.

Fast growing business with no leverage

When talking about Lululemon Athletica Inc. (NASDAQ:LULU), investors might think of a fast growing business. That is true. In the past five years, Lululemon Athletica Inc. (NASDAQ:LULU) has growing quite rapidly. Revenue nearly quadrupled from $353 million in 2008 to $1.37 billion in 2012, while the net income shot up from $39 million to $271 million in the same period. Furthermore, the retailer could also be considered a cash cow business. The operating cash flow rose from $46 million to $280 million, whereas the free cash flow advanced from $6 million to $187 million during the past five years. What interests me is that Lululemon Athletica Inc. (NASDAQ:LULU) is a fast growing business without any help of leverage. As of Jan 2013, it had $887 million in total stockholders’ equity, $590 million in cash, and no debt.

The see-through pants issues are estimated to cause the yoga retailer to lose up to $67 million in revenue for fiscal year 2013. The revenue is expected to be around $1.61 billion to $1.64 billion while the diluted EPS would be in the range of $1.95 – $1.99 for the year.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!