Tuesday, August 28, 2012

lululemon

I first came across lululemon through Bronte Capital. Do read Bronte's page - it's fantastic.
Shares o/s: 142 Mn
Price: USD 65
M Cap: USD 9.2 Bn
This is their 10-K for FY11 (Dec. ending)
This is their annual report video (which, as a concept, I find uber-cool!!!)

Sales in FY12, 11, 10, 09:
USD 1 Bn, USD 711 Mn, USD 453 Mn, USD 353 Mn

GP is 55-60% odd
PAT is : USD 184 Mn, USD 121 Mn, USD 58 Mn, USD 39 Mn
i.e. 18%, 17%, 13%, 11%

E/P: 2% or 50 P/E
Q1 results are USD 285 Mn in sales - increase of 55-60% over last year.

Supposedly, the product is brilliant and it has ardent admirers.

Let's shift focus to another company now.
VFCorporation
Many of you may not have heard of it but here is the list of brands they own. More than 30 brands.
Shares: 111 Mn
Price: USD 152
M Cap: USD 16.7 Bn
This is their 10-K.

Sales:
USD 9.5 Bn, 7.7 Bn, 7.2 Bn, 7.6 Bn
PAT: USD 888 Mn, 571 Mn, 461 Mn, 602 Mn

E/P: 5.4% or 18.8

That is the picture I want to give here.
One is a seemingly growth company and the other is this powerhouse of brands such as Timberland (which they bought last year), North Face, Lee, Wrangler and many smaller brands.
Should Lulu be worth less? or should VFC be worth more?
I am sure I would not pay this price for lululemon because it is easy for them to disappoint on sales - then again, they seem to have created a wonderful new product category for yoga and simple outdoor activities and simple sports/ recreation activities.

I will try and write about what happens to lululemon in the future.

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