Athletic retailer Lululemon (NASDAQ:LULU)

The company, despite beating on both top and bottom lines and offering a stock buyback, failed to woo the market with its guidance for the upcoming fiscal quarter. The company offered EPS guidance of $1.71-$1.78, which fell far below the analyst consensus estimates of $1.89. 

Lululemon reported same store comparable sales as increasing by 1%, another number that failed to excite both analysts and investors. During the conference call, Laurent Potedevin, the company's CEO, admitted there was some distraction with the company's recent board room mix-up between the current board and company founder Chip Wilson. Executives finished their conference call by saying their expectations are for better foot traffic in stores for the coming quarter, but with a questionable conversion rate of being able to monetize this traffic.

Despite the offering of a $450 million common share buyback to be carried out over the term of two years, Lululemon still saw its stock clipped upwards of 15% on the 12th. On the morning of Friday the 13th, coincidental as it may be, J.P. Morgan came out and downgraded the stock based on the results posted in the company's Q1 report.

Competition heats up
Since Lululemon's see through pants issue, the doors have been a little wider opened for those who want to enter into the competitive landscape against the company.

Lululemon faces stiff competition from newer successes in the yoga-wear industry, such as Gap's (NYSE:GPS) Athleta brand and Victoria's Secret's PINK brand, which is now dabbling in yoga wear. Even companies like Under Armor (NYSE:UAA) were found making investments  into their women's business to try and compete. 

Lululemon stock was hit hard after the company released earnings on Thursday, June 12th.

But the balance sheet looks good...
As a matter of fact, Lululemon's balance sheet looks excellent. According to Yahoo! Finance, for the period ending Feb. 2, 2014, the company had $1.2 billion in assets and a mere $153 million in liabilities. The company listed no long term debt and total shareholder's equity of $1.096 billion. So, despite the high multiple the company trades at (18x forward P/E), the company has a price to book ratio of just under 5. 

Additionally, the company currently has plenty of cash on hand for operations, with just under $700 million, or roughly $4.80 per share, their last quarter.

...which could make the company attractive
What this poses to me, is the question of how much a Lululemon could be worth to a company like Under Armor or Nike (NYSE:NKE)

This type of balance sheet could make the company incredibly attractive at these prices. Despite trading at a forward multiple of about 18, it's still far less aggressive than industry competitors like Nike (22) and Under Armor (49). Lululemon could remain appealing because you can make the argument that they are still in an aggressive growth stage; the company plans to open up 20+ stores in Europe over the next year while continuing to expand its international footprint. 

With the board room shakeup, now could be a great time for a potential acquisition bid for Lululemon. Putting a bid in for a company with the board of directors feeling relatively unmotivated could cause them to approve a sale at prices lower than they would normally think of. The stock is trading at a significant discount to what it's traded at in the past, and this would allow potential suitors to offer a healthy premium to the current share price. With the growth in tact and the brand already built out, Lululemon could be an attractive target for any athletic wear company that wants to establish a footprint with women.