Lululemon Athletica inc. (LULU): What Does Billionaire Stephen Mandel Think?

Page 1 of 2

Lululemon Athletica inc. (NASDAQ:LULU)Billionaire Stephen Mandel’s Lone Pine Capital recently upped his stake in Lululemon Athletica inc. (NASDAQ:LULU); he now owns 5.6 million shares, or 5.01% of the apparel company’s outstanding shares. Mandel’s recent purchase is a 16.5% increase from the shares that Lone Pine owned at the end of 2012.

Mandel has some $17 billion of assets under management and is a Tiger cub. Mandel left Julian Robertson’s Tiger Management in 1997 to launch Lone Pine, a fund that employs a “bottom-up” strategy for picking stocks.

The big news for Lululemon Athletica inc. (NASDAQ:LULU) of late was the mid-March announcement of a potential shortage in its supply of black Luon pants. This was due to the fact that a number of shipments had to be pulled from shelves because they failed to meet technical specifications (the sheerness issue). After briefly dropping below $63 per share on news that it would be recalling a number of yoga pants, the stock is now back up to pre-recall levels, above $68 per share.

Lululemon Athletica inc. (NASDAQ:LULU) also managed to post EPS last quarter that came in at $0.75, compared to $0.51 for the same period last year. This was on the back of 10% higher same- store sales and 31% higher revenue. The company also expects to post first- quarter revenue between $333 million and $343 million after accounting for lost revenue in the range of $12 million to $17 million due to the black-Luon issue.

I still have my reserves about Lululemon Athletica inc. (NASDAQ:LULU), given that its niche business model and risks related to expanding into other markets. Lululemon Athletica inc. (NASDAQ:LULU)’s future appears to be rooted in its eventual transition into general athletic wear and not just women’s yoga clothing. However, that market is already ripe with real apparel suppliers, including the likes of Under Armour Inc (NYSE:UA), Adidas and NIKE, Inc. (NYSE:NKE).

Is there a better way to invest in apparel?

Under Armour Inc (NYSE:UA) develops and distributes apparel, footwear and accessories. Apparel is expected to continue to be the revenue driver, accounting for more than 75% of the company’s revenue.

According to Standard & Poor’s, the synthetic performance-apparel market is around $3 billion, with Under Armour owning some 60% of that market. What’s more is that the company introduced cotton performance apparel in 2011, which expanded its addressable market to include the $12 billion active-use sports apparel market. Under Armour is also still limited geographically (especially compared to Nike), getting more than 95% of its revenue from North America.

Under Armour Inc (NYSE:UA) also announced first-quarter earnings results earlier this month, announcing that revenue increased 23% year-over-year. However, net income was down 47% due to an increase in marketing expenditures.

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 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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!