The Growth Spurt
If you were to map LULU on the life scale of a company, it would be in the preadolescent years… with burgeoning signs of maturity with so much potential still to come. And the growth spurts are astronomical… and far from over. This “kewl” yoga inspired apparel, with their anti-stink pants and “ass shrinking” apparel is still a relatively small company in the early stages of growth. Recently, the executive reported same store sales up 26% for the last quarter, compared to 4-5% for the average retailer.
With only 150 locations in North America, there is plenty of room to expand. Yet, before they’ve even got their “mother” stores into more cities, they’ve already rolled out Aviva, their children’s line which targets 6-14 year olds. Already, they’ve seen this grow at a 86% clip and they continue to expand into swim wear and rogue biking clothes for men. All of these expansions, as well as the potential for 350 domestic locations, adds up to growth for many years to come.
But this growth is not merely a hope of things to come… it is a reality now too. LULU leads the growth metrics in its industry… with an expanding growth internationally too. With only 19 stores in Australia and New Zealand, one in London and one in Hong Kong, LULU has so much more room to expand within and outside of the domestic borders.
A Unique Stock
LLL.TO is a unique stock opportunity… trading on the TSX and as LULU on the US exchanges. Interestingly, for Canadians looking for a home-grown growth story in which they can invest using their Loonies and Toonies, LLL.TO is the perfect story. But it’s more than their Canadian west-coast heritage that makes them unique… it is also their products!
LLL.TO uses new fabrics and technology in their clothing that set them apart from their competition. With the use of synthetic fabrics, they are able to control costs when commodity prices fluctuate and the price of cotton gets more expensive for their competition. Now, they are taking their unique flare and expanding into “normal” clothing.
A Long-Term Position in Your Stock Portfolio
Lululemon has a pristine balance sheet… with no debt and approximately $409 Million in cash. Some pencil heads might note they are trading at 35xs next year’s earnings, but what they may fail to also point out is their 30xs growth rate. So, expensive is a little bit of a subjective evaluation. The fact is LULU is geared for growth for years to come… and when you find a stock you love, one that you know their products intimately, and they are able to put up the kind of numbers we’ve been seeing, it might just be worth holding onto for the long run.
And we’ve only just begun to touch on the multitude of reasons this stock is poised to bring your stock portfolio long-term gains. With e-commerce growing at an 85% clip which serves markets that do not even have LULU stores (but people want to be buyers of their products), and their expanding signature line which includes anti-bacterial fabric that inhibits bacteria from growing, expect great results for many quarters and years to come.
And their leadership knows how to make that happen… after all, Christine Day took over the helm as CEO in 2008 after serving for 20 years to make Starbuck the leader it is today. I’d encourage you to watch their video… I found it not only informative, but inspiring too!
So, if you not only want to look good and remain healthy in Lululemon’s lifestyle brand and you want your stock portfolio to look just as good and healthy in 2012, 2013 and beyond, than you may want to consider Lululemon Athletica… a true growth stock.