LuLulemon Athletica

GOOS-T vs. LULU-Q. He follows them. He would like to own LLL-T. GOOS-T has come off their all time highs about 50%. He either needs to see their earnings grow or their stock price drop. He is looking at it. Both are extremely well run companies with strong brands. They have excellent management teams and strong franchises. GOOS-T would be his preference from a valuation perspective.

This is high end consumer merchandise. This always happens in the 2^nd half of the business cycle so she thinks it will have headwinds for the next few years. The stock is down a lot, but she wouldn’t buy it here. If you own, Sell.

Valuation has always kept her away from this stock. A growth momentum name so has a very high multiple. Had some product quality issues, which had a negative impact on traffic. Still doesn’t think it is cheap.

Short. Company had no numbers or anything positive on analyst day. Thinks the whole yoga craze is done.

They were in a massive growth phase for a longtime, while they were opening stores and sales were growing. Sales growth has slowed. The market is not willing to pay the multiple that it was. A retailer trades on earnings per share. It is not a darling of the street any more. It will be a market performer at best.

Prior to some of its little mishaps recently, the stock had been flying. Trading at 24X PE, which doesn’t leave it a lot of room for mistakes. As you can see, when a mistake happens, the stock is going to fall off. A bit expensive.

(Market Call Minute) An avoid until you get a better sense next quarter. Expensive compared to the rest of the peer group.

Classic example of a company that everybody falls in love with. It is really a single type of product company. Captured a whole craze and was trading at enormous valuations. Gap (GPS-N) and Nike (NKE-N) are launching new lines that are very competitive. As a general rule, when these stories start to break, valuation metrics almost become immaterial. The major founder of the company has been selling stock.

It is difficult to say if this is the time to buy it. Today there was a profit warning. Will the problems continue? He doesn’t know. Stand aside for now.

Has been a tremendous success story. However, you have a CEO/founder that is leaving. People generally don’t leave when things are going well. If he had to guess, he would guess that the business has probably peaked along with the stock price. Even if the company continues to do well, the stock is probably going to start selling off.

Thinks there is still a significant amount of growth for this company in terms of the amount of stores they can open to attract additional customers. This is a trend that he likes in terms of athletic apparel and healthy living that is being promoted globally. Right now there is a management transition and they have not found a permanent CEO. Leadership is a very, very important point in operating a growth company like this. Also, it is a very rich stock that trades at big multiples. He would be cautious on this one.

(Best call ever made.) Bought this in 2008, before the crash got most acute at around $10-$12. Everyone thought he was nuts. The Short interest was huge. He kept seeing people wearing their clothing, Lululemon bags and kept calling the company who kept saying everything was fine. All the analysts were downgrading it. Dropped down to about $3. He just sold his last position and thinks he gained about 14 fold.

Apparel stocks in general have been performing very well. In this space, there are a lot of companies that are doing well. Recently this one has had a tougher time because of some of the problems they have faced with the fabric and their change in management. This is a great, long-term growth story. He would like to see a quarter under their belt of getting things turned around.