You have definetly heard of this one before, perhaps even bought their products. The Company is Lululemon ($LULU). A household name over the last few years, no questions asked. Lululemon also called Lulu, is mainly an athletic/gym clothing line, with other stylesand products included. Their main objective is to sell the highest quality materials & clothes, with an expensive price tag. That statement may scare you, but trust me it works. I’ll show you the numbers & tell you their social power to back it up.
The Numbers
Growth. The last 5 years Lulu has CONSISTENTLY grown its revenue and profits. All while not decreasing gross profit margins.
The earnings per share has also gone up significantly since 2016.
**I will not bore you to death with the numbers anymore. Just know the company is increasing sales numbers & profits, which is what makes a great company.
Expanding The Brand
Lulu plans to grow under their “The Power of Three” strategy.
1.) Product Innovation
2.) Omni-Guest Experience
3.) Market Expansion
1. Product Innovation
3 years ago Lulu was just a WOMAN’S athletic clothing line. Now they have an entire men’s line, ranging from shirts, shorts, pants, etc. In the companiy’s opinion, what really hurts them is being tremendously nieched toward woman’s attire. Using this as one of their key growth elements says a lot about who they are. Companies who have the means to expand their products/services to cater new customers, make excelent long-term investments.
- Men’s section revenue increased 34% in 2019
- Started a skin care product line
2. Omni-Guest Experience
This area is where the company aims to build a connection with their customers, not just sell products.
- Membership programs in major cities like Denver, Chicago, NYC, Boulder, etc. The program is a combination of workout classes, yoga, locker rooms, meditation, and more.
- Hosted 10k marathons in Toronto, San Diego, and Edmonton.
- Sweatlife festivals in London, Paris, Berlin, and more
3. Market Expansion
Essentially this means growing a presence internationally.
- Stores established in Germany, France, Netherlands, Norway, & parts of Asia,
- International markets grew 34% in revenue in 2019.
The Products
Firstly, quality. Talk to anyone you know and they will say the materials of lulu clothing is one of a kind. All my friends who are girls say the leggings are better than any other brand. The products last a long time, and have a comfortabilty factor that no other company provides.
I have a pair of Lulu shorts and let me tell you. They are the most comfortable pair I own!! The comfort plus the style is something that can’t be beaten right now.
It’s no secret that any product from them is very expensive. Which might scare you away from investing in the company. But ask yourself these questions. Do people keep buying from them? Is the company more profitable year after year? The answer is yes to both of them, so be an invester rather than a consumer for your case.
As the saying goes, “If you have something people want, charge them for it.”
Social Factor
The social media era over the years has created “social norms” in the fashion world. Clothing, now more than ever, has the ability to give insight on your personality, characteristics, and genral persona. Whether you agree with this or not, you must realize, social media has given a spotlight for clothing brands. Right now Lululemon has solidifided themselves as a proven, stylish, top-tier clothing brand.
Celebrities like Addison Rae, Madison Beer, Kendall Jenner, and so many more are seen everday wearing Lululemon!!
The media era gives us as investors new ways to analyze stocks. If famous people keep posting themselves wearing specifc clothing, everyone else wants to buy it. If celebrities are eating a certain food, guess what the average person is gonna do?
The Stock
Right now ($LULU) is at $323 per share. Yes, I know this is a high price. But you don’t have to buy a full share everytime you buy. Fractional shares are avalible on certain brookerages, like my favorite M1 Finance. You can buy 1/2 a share or even 1/4 share.
In my opinion the share price is a bit overvalued at the moment. I want to buy when price goes lower, right around $300 per share.
As I’m writing this post the stock market is at all time highs. Which means I’m not buying anything right now and neither should you. Remember good deals will always present themselves, just be patient. I will be waiting for the next market dip to buy anything, but first on my list is Lulu. I will make sure to inform you when the market dips, and I start buying.
All stats are from Lulus annual report: https://investor.lululemon.com/static-files/8df91f4d-25a1-4e69-8b94-606f9c370440
M1 Finance link: https://m1.finance/-It9Yn7neCcV
The Common Trader 