Why Lululemon Is Poised to Keep Pulling Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, yoga gear retailer lululemon athletica (NASDAQ: LULU  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Lululemon and see what CAPS investors are saying about the stock right now.

Lululemon facts

 

 

Headquarters (founded)

Vancouver, Canada (1998)

Market Cap

$9.8 billion

Industry

Apparel

Trailing-12-Month Revenue

$1.4 billion

Management

Founder/Chairman Dennis Wilson

CFO John Currie

Return on Equity (average, past 3 years)

35.5%

Cash/Debt

$590.2 million/$0

Competitors

Adidas AG

Nike

Under Armour

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 24% of the 1,369 members who have rated Lululemon believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, sikiliza, succinctly summed up the bear case for our community:

The problem with fads is that they come to an end. Granted, Lululemon targeted an existing and fast growing core market of yoga enthusiasts who were not afraid to talk it up but over time, the company's growth depended more and more on the ordinary lady picking up a pair of well-fitting yoga pants for everyday wear. This might have signaled one of two things: 1) That the core market was saturated or 2) That the initial allure and exclusivity of the product was now broken.

Product issues aside, management has not been stellar and I see an [Aeropostale (NYSE: ARO  ) ] situation brewing where a good company with great products gets distracted by management side-shows.  

Lululemon has the potential to grow its sales by 10 times if it can penetrate other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.

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Read/Post Comments (4) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 12, 2013, at 5:00 PM, randysandy wrote:

    Would you be writing this article if the stock hadn't plunged dooshbag?

  • Report this Comment On June 12, 2013, at 5:02 PM, randysandy wrote:

    Basically, you're one of the lemmings that follows a few negative comments and try to manipulate with an article? You don't really know what you're talking about do you?

  • Report this Comment On June 12, 2013, at 5:20 PM, Domeyrock wrote:

    They've been writing the same comments for a looooong looooong time. EACH time after every person wrote in about production issues, colors running in the wash, see thru pants, LULU has beaten every quarterly estimate every quarter. Don't pay the lemmings any mind. This is the only "fad retailer" that sells just as much product per square foot if NOT MORE than Apple does. So the nay sayers can put that in their pipe and smoke it.

  • Report this Comment On June 12, 2013, at 11:25 PM, PuddinHead42 wrote:

    Actually, the beat on earnings, so the "fad" must not be fading. The bizzare departure of a CEO with no successor is what spells very bad trouble. They could find a great retail CEO to bail them out. Maybe UnderArmor will buy them ;-)

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