Friday, September 10, 2010

Speculating Lululemon

As you can probably tell, I am slightly obsessed with Lululemon and have spent way too much on the clothes over the last few months.  However, I don't think I am alone; I feel like there are lots of other Lulu obsessed people out there based on my social media observations: there are several blogs devoted to Lululemon and tons of very active Facebook pages all about Lululemon.  I was convinced (partially based on my own excessive spending) that Lululemon would have a bang-up second quarter (ended August 2, 2010), so I've been closely watching the stock, with the intention of buying the stock as a short term trade and selling it as soon as second quarter was announced.  Well, I did jump into the stock a few weeks ago at a decent price (not the lowest point unfortunately; still kicking myself for not doubling down when the stock dropped 10% a few weeks ago based on a dumb Jefferies analyst downgrading the stock).

Lululemon announced earnings today which were quite impressive by any standards; 2Q this year vs. 2Q last year: revenues up 56%, 31% same store sales increases, gross profit up 78%, and income from operations up 139%, with all margin percentages up as well.  They handily beat analyst expectations and increased full year guidance.  The stock was up today by $4.68, or 13.05%; not bad for one day.  We decided to lock in our gains and get out.  Who knows what will happen, the stock could go up tomorrow, or back down, I have no clue. Valuation metrics are still pretty out of whack for Lululemon, so I'm nervous about it being a long-term bet, but it was a fun short-term play.  In any case, not a bad way to fund my Lululemon obsession!  Now onto the next stock pick...

Btw, I am no stock market expert; this was actually the first stock I've ever purchased!
Update (9/14/10): stock continues to soar, up another 7% after we sold it, bummer, we should have hung on!

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