To me, it seems like a crowded space to try to get into. Lululemon Athletica inc. (NASDAQ:LULU) is still the leader in yogawear, but companies like Gap, Nike, and Under Armour are all pushing for a piece of the global pie. Even so, Lululemon Athletica inc. (NASDAQ:LULU) has managed to grow comparable sales at a good clip, and last quarter they rose 7% year over year.
A potential winner
Even if the company can’t break into the yoga business, it has one more trick up its sleeve. Juicy is planning to launch a lingerie line that’s geared toward the same customers that Victoria’s Secret targets. That would put Juicy in a less crowded market — in terms of “mall branding” — and give it a way to rebuild its brand image.
While Lululemon Athletica inc. (NASDAQ:LULU) has been down due to CEO transitions and sheer pants recalls, it’s by no means out. With the extra competition, the yoga plans for Juicy seems like a nonstarter. On the other hand, Victoria’s Secret has had less than fabulous sales recently, with comparable online sales down year to date. In store, the brand hasn’t fared much better, with comparable sales up just 2% in 2013 compared to 2012.
Overall, Juicy is looking fairly weak. The business has a small set of good opportunities, but all of the contingent factors — competition, retail sellers, and brand demand — make any comeback seem precarious. The next few quarters will be telling for Juicy Couture, and if it fails to hit its announced goals, things could go from bad to worse quickly.
At the same time, Fifth & Pacific Companies Inc (NYSE:FNP)’s other brands are doing well. Kate Spade and Lucky are both excellent businesses, and the expansion of Kate Spade could be a major win for the overall company. It’s tempting to take a risk on Juicy, knowing that even if it fails, it has two better brands to rely on. Just don’t count on anything magical from Juicy in the next year or so.
The article Why Juicy Couture Is Down On Its Luck originally appeared on Fool.com and is written by Andrew Marder.
Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour.
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