Here’s Why Lululemon Stock Is Up Over 80% This Year While The Rest Of Retail Struggles

12/04/2019
Source: Forbes
by: Sergei Klebnikov

Topline: Amid the so-called death of retail that has occurred in recent years, yoga-pants maker Lululemon has noticeably bucked the trend. Rapidly growing revenue has helped its stock price surge more than 80% this year, as the company looks to expand in areas like menswear, e-commerce and international sales.

Compared with the S&P 500 Retail ETF’s growth of less than 5% this year, Lululemon stock has soared more than 80% in 2019, easily eclipsing rivals like Nike and Under Armour, which have gained 25% and 2%, respectively.

With its market-leading position in yoga and workout clothing for women in North America, Lululemon is often credited as the creator of the popular athleisure apparel trend and has grown at a fast clip in recent years.

Unlike other retailers, Lululemon has avoided selling its products in department stores, which not only builds customer loyalty to the brand, but also gives it more control over pricing, discounts and marketing while competitors who sell through third-party retailers often have to share margins.

Lululemon controls both production and distribution: It sells its high-margin apparel, with each unit usually priced at $100 or more, through its physical stores, which made up around 65% of revenue in 2018, and on its website, which accounted for 26% of revenue.

Going forward, Lululemon is hoping to expand into new territories, such as China and Europe: Investment researcher Morningstar forecasts that international sales will hit $2.8 billion by 2028—up from $360 million last year, as the company opens more than 350 additional stores

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