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
Summary:
·
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.
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.
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.
