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 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

 

 

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


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 ] 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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The article Why Lululemon Is Poised to Keep Pulling Back originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica. It recommends and owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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