Sunday, December 22, 2013

Lululemon's Real Problem Is That It's Still A Yoga Company

In my latest article for The Motley Fool, I discuss one of my favorite group of companies, the retail apparel makers. Lululemon (LULU), Nike (NKE) and Under Armour (UA) all have very popular brands with loyal consumer bases. Not surprisingly, the three stocks have all been media darlings in recent years.

However, Lululemon has a crucial problem, it is still only a yoga company. Whereas Nike and Under Armour have both greatly diversified their business mix away from their original core audience, Lululemon is stuck selling primarily to women and unable to branch out effectively.

Additionally, Nike, Under Armour and even The Gap (GPS) are starting to market specifically towards yoga consumers and beginning to eat into Lululemon's core market share. When added with a management team that seems incapable of stemming the tide, Lululemon appears headed for a drastic slowdown in growth, which is directly reflected in the company's recently lowered guidance and plunging share price.

Click here to read more about why Lululemon is in trouble and the course I think it has to take to remain on a path towards growth. Enjoy!

Phil




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