Does lululemon Athletica Inc. (NASDAQ: LULU) really feel like Under Armour Inc. (NYSE: UA)? The long and short of it is "NO, it doesn't." But there are many merits ahead, and the underlying "sport" of yoga has actually continued to grow in appeal to the masses. Yoga, it seems, isn't just for hippies anymore.
On Friday evening's MAD MONEY on CNBC, Jim Cramer noted that Lululemon has many of the same characteristics of Under Armour. In his defense, this was more figurative than literal and he said there is not a hurry to buy it because it has run a lot already. The company has many store openings and even more coming in 2008, and Cramer is looking at it for accelerated revenue and accelerated earnings growth.
LULU is an odd call because there are actually very few reliable statistics on just how many people practice yoga. Many still believe that it's a bit strange or "out there," compared to other forms of exercise or stress-relief. When you look at the lululemon.com website you will understand why. If you have ever taken a yoga class, you will know why the stereotypes can instantly be debunked. LULU is going to be interesting to watch, mainly because of its stellar IPO performance. Cramer recently called Under Armour "The Next Nike!" but that won't be the case for LULU. Still, there is a growth story here, and one that investors are looking at. How it will do and if it manages its own growth is where the jury is still out.
Is lululemon (LULU) really the next Under Armour (UA)?
Posted Aug 6th 2007 3:30PM by Jon Ogg
Filed under: Under Armour'A' (UA)
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Reader Comments (Page 1 of 1)
8-06-2007 @ 5:05PM
mbf6b said...
Obvious potential for store openings at lulu but comp store performance will suffer in the process. Their $1600 sales/sqft figures are somewhat based on the fact they only have 1 store in some geographic regions, this will have to change as they look to expand. Sure, they may see 50% overall growth over the next few years due to new store openings, but comp store growth won't follow suit, and that will be the downfall of lulu.