Thursday, October 11, 2007

Fortune sours on lululemon

I'm holding my shares because of immense growth, the buildout in the states. Fortune's Suzanne Kapner says the growth can't sustain the market cap.

Behind Lululemon's lulu of a stock ride

To be sure, Lululemon's 30 percent sales growth at stores open at least a year in the period was impressive, even after subtracting the 5 percent gain from the strength of the Canadian dollar. The rapid pace of same-store sales growth is expected to slow next year, however, with some analysts predicting a drop to 12 percent and others going as low as 6 percent. With the company's share price continuing to climb - the stock is up 28 percent in the last month alone, despite no actual news - investors better hope that Lulu doesn't turn out to be a lemon.

While I have a different outlook than Kapner, it's important to know the facts. Beyond the mediocre track record of CEO Robert Meers, it's the competition that gives me concern. And yet, it's not serious enough for me to pull out. I'm cautious, of course, but I still believe this ride gives us lemonade.

LULU traded down 3.5% today to 45.18.

1 comment:

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