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Lululemon Startup Laid Off Staff to Focus on Branding

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Price movement of Lululemon

Lululemon Athletica (LULU) has a market cap of $8.4 billion. LULU fell by 0.43% to close at $60.50 per share as of February 22, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis was 2.8%, 6.0%, and 15.3%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, LULU is trading 1.3% above its 20-day moving average, 9.0% above its 50-day moving average, and 4.7% above its 200-day moving average.

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.38% of its holdings in Lululemon Athletica. The ETF tracks a market-cap-weighted index of midcap growth companies selected by CRSP. The YTD price movement of VOT was -9.0% as of February 19, 2016.

The Schwab US Mid-Cap ETF (SCHM) invests 0.28% of its holdings in Lululemon Athletica. This ETF tracks a market-cap-weighted index of midcap stocks in the Dow Jones US Total Stock Market Index.

The competitors of Lululemon Athletica (LULU) and their market caps are:

  • Nike (NKE) – $102.5 billion
  • The Gap (GPS) – $10.9 billion
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Lululemon laid off its staff

Kit and Ace, the retail startup of Lululemon Athletica founder Chip Wilson’s family, laid off ~10% of its staff, or 35 people, at its Vancouver headquarters, due to the slowness of the expansion.

This shows the focus of the company on brand building and expanding its product lines rather than opening new stores.

Lululemon raised fiscal 4Q15 guidance

Lululemon Athletica (LULU) has raised the following projections for fiscal 4Q15:

  • net revenue to be in the range of $690 million–$695 million, an increase of 15% and ~19% on a constant dollar basis as compared to fiscal 4Q14
  • diluted EPS to be in the range of $0.78–$0.80 as compared to previous guidance of $0.75–$0.78.

Performance of Lululemon in fiscal 3Q15

Lululemon Athletica (LULU) reported fiscal 3Q15 net revenue of $479.7 million, a rise of 14.4% when compared to net revenue of $419.4 million in fiscal 3Q14. Its net income and EPS (earnings per share) fell to $53.2 million and $0.38, respectively, in fiscal 3Q15 as compared to net income and EPS of $60.5 million and $0.42, respectively, in fiscal 3Q14.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Lululemon were 33.1x and 8.0x, respectively, as of February 22, 2016.

Next, let’s take a look at Columbia Sportswear.

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