GROWTH STORY: LULUEMON – CANADIAN YOGA?

Lululemon Athletica (LULU) was mentioned twice by Jim Cramer on Mad Money, once last night on his show and again this morning on TheStreet TV. Well this got me thinking what the heck is this company. Yahoo Finance revealed nothing but I dug deeper and found that Lululemon just IPO last week on the 27th of July at an IPO price of $18 but now about $32 giving it a market cap of 2.8 billion on who knows how much in sales but it better be at least close to one billion in annual sales to justify the price right now.

Goldman, Sachs & Co. and Merrill Lynch & Co. served as joint book runners with Credit Suisse, UBS Investment Bank, William Blair & Company, CIBC World Markets, Wachovia Securities and Thomas Weisel Partners LLC serving as co-managers for the IPO. We should expect some upgrades from all of them soon as usual.

Can the yoga fad rise to the top? Well Cramer compared this stock to Under Armour (UA) and Crocs Inc (CROX) as a type of growth stock that is underestimated but has a strong balance sheet but just high on valuation which will bring out the shorts which keep both Under Armour and Crox sky high in valuation. Cramer insisted that you may have missed the initial ride but you should definitely not doubt this stock if it gets a large short position. I don’t know about the financials yet but soon we’ll see if it grows or not. Apparently it’s global and has over 1,700 employees.

In Latin America, yoga inspired sports wear is actually very popular and there is a niche in the world as a good women’s brand that dominates this category because Nike and Under Armour are still very masculine. Lululemon could be the niche brand of the decade. We’ll see.

About Lululemon Althletica

Lululemon is a yoga-inspired athletic apparel company that creates components for people to live longer, healthier and more fun lives. By producing products that keep people active and stress free, lululemon believes that the world will be a better place. Setting the bar in technical fabrics and functional designs, lululemon works with yogis and athletes in local communities for continuous research and product feedback. lululemon athletica was founded in Vancouver, British Columbia in 1998 by Chip Wilson, founder of Westbeach Sports, a skate/surf/snowboard clothing company. lululemon athletica is extending into new communities across North America and throughout the world. For more information, visit www.lululemon.com.