Thursday, December 2, 2021

An International Equity holding: Lululemon Athletica Inc. (LULU, $462.46): “Mirror, Mirror on the Wall, Who Trains the Hardest of Them All” By: Aidan McGuire, AIM Student at Marquette University

Lululemon Athletica Inc. (LULU, $462.46): “Mirror, Mirror on the Wall, Who Trains the Hardest of Them All”

By: Aidan McGuire, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


·         Lululemon Athletica Inc. (NASDAQ: LULU) is an athletic apparel retailer that offers yoga-inspired products for men, women, and young women. Products include shorts, jackets, yoga pants, as well as tops for yoga and intense training.

·         LULU operates in two business segments: Direct to Consumer (52% of FY21 Revenue) and Company-Operated Stores (38%)

·         In the aftermath of COVID-19, LULU’s e-commerce saw a dramatic rise, up 100.70% from 2020.

·         Even in the aftermath of the pandemic, LULU continues to stay on rise, most recently surpassing analysts’ predictions for Q2 2021.

Key Points

Since Lululemon was last analyzed in December of 2020, their price per share has risen 28.26%. They reported impressive Q2 results, with net revenue rising 63% in North America, as well as rising 49% internationally. From a company who is shown as generating the majority of revenue from their Direct-to-Consumer segment, Company-Operated stores reported a net revenue increased of 142%, with Direct-to-Consumer rising just 8%.

Mirror is a home fitness machine that is wall-mounted for streamed workouts, featuring thousands of classes, with personal training as an option for an additional subscription fee. In 2019, LULU made its very first investment, in any company, for $1 million, followed by an acquisition of Mirror in June of 2020 for $500 million. With this, Lululemon forecasted the user-friendly technology to produce $700 million in revenue and total over 600,000 subscribers by 2023. Earlier this month, it was announced that this product was coming to 40 Canadian Lululemon stores, on top of the near 200 stores it is featured in within the U.S. Given the popularity, this doesn’t look like it is sliding downhill anytime soon, as this product embodies the hard working and self-engagement mindset LULU markets through their e-commerce service, as well as in store experience.

What has the stock done lately?

Over the past month, LULU has increased 12.59%, with an increase from October 12th a direct result from the overachieving Q2 earnings. This rise is no surprise given the recent announcement of the collaboration with Team Canada to become the official team outfitter through the 2028 Summer Olympics, paired with upward trend in stock price since the beginning of March 2021.

1 Month Stock Chart

Source: FactSet

Past Year Performance:

In the last 52 weeks, Lululemon’s share price has risen 39.94%, breaking their 52-week high. This stock is one that tailed off to begin the year, but ever since, has been as hot as they come in regards to growth. With a Q2 that blew away analysts’ expectations, LULU hasn’t slowed down since, getting bigger as the days continue to pass.

1 Year Stock Chart

Source: FactSet

My Takeaway

Lululemon was added to the AIM International Fund in April of 2016, with a share price of $65.48 and since then, has grown just over 7 times in size. This stock was last analyzed in December of 2020 and even since then, the stock price has risen 33.76%, a remarkable growth compared to the original addition. LULU was at the forefront of self-motivation throughout the COVID-19 pandemic with their line of athletic clothing and that message hasn’t stopped, with it not seeming to slow down anytime in the near future and thus, should be kept in the AIM International Fund for the time being.