Sports attire and yoga wear organization Lululemon Athletica (NASDAQ:LULU) is struggling due to its see-through yoga pants controversy for more than a year. Lululemon's stock has taken a big beating since March 2013 when the sheer pants controversy raised its head, and things haven't changed so far. Furthermore, Lululemon's uneventful analyst day seems to have diffused investors' enthusiasm.
With rivalry rising from the likes of Under Armor (UA) and Gap's (GPS) Athleta brand, Lululemon will discover the going troublesome later on as it tries to turn around its business. Anyway the organization is in fact making some great strides. We should see if Lululemon can succeed in its efforts and on the off chance that it is a decent purchase at current levels.
Going for a turnaround
However, the great thing is that this target path is in front of the $200 million estimate that Wall Street analysts had anticipated from Lululemon's men's business.
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What's more, Lululemon is attempting to turn around its ladies' business. The organization has dispatched another garments line, known as &go, that could be worn throughout the day, whether in a rec center or a club. Lululemon is attempting to strengthen its position by reviving its product offering and is also seeking global expansion opportunities.
The organization is seeing an increase in popularity from Asia and Europe. Lululemon is going to open more stores in Asia, where it as of now has six locations. Also, Lululemon is at present enlisting a general chief for its Asian operations. This shows that the organization is serious about expansion in the landmass, and its improvement in the locale should get pace once there's a committed official.
Getting up and going in Europe, Lululemon as of late opened its first store in London. Lululemon had created a strong buzz around the brand by hosting a Yoga occasion at the Royal Opera House. More than 9,700 individuals turned up for the occasion; however there were just 350 spots. This shows the organization's strong showcasing activities and brand value. Encouraged by the response that it has gotten, Lululemon has chosen to open its second store in London before the year's over.
Advancing, Lululemon is taking a shot at enhancing its item blend. The new Chief Product Officer is aggressively taking a gander at each aspect of item change, with focus on both seasonal and center products. Lululemon has seen tremendous interest for seasonal products in North America recently, as they are selling at four times the foreseen rate. So, the organization could be required to focus all the more on this class.
The opposition is strong
Notwithstanding, the stressing element for Lululemon is its negative same-store sale performance. In the final quarter, the organization's same-store sales were down 2%. The company has been beaten on this front since the sheer pants controversy, which gave a chance to peers such as Under Armor and Gap to consume into Lululemon's business sector with their products.
Under Armor attempted to benefit as much as possible from Lululemon's goof last year by advertising its UA Studiolux Quattro accumulation aggressively. Under Armor apparently has a financial plan of $250 million to spend on advertising to ladies. Additionally, it may be possible that Under Armor could charm customers away from Lululemon by advertising that its yoga pants never pill. So, Under Armor is an intense danger for which Lululemon needs to watch out.
Then again, Gap has benefitted as much as possible from Lululemon's quality issues. Crevice has been attempting to take a piece of the pie from Lululemon for a few years, opening its Athleta locations close by Lululemon's stores. Likewise, Lululemon's yoga pants cost $30 more than Gap's Athleta. The contrast between the material used in making both is almost unimportant, yet Lululemon does give a concealed waistband pocket, as pointed out by Business Insider. Henceforth, paying a $30 premium for Lululemon's pants may not bode well for customers and could prompt value cuts.
Lululemon is confronting huge obstacles. Anyway the organization isn't losing trust. In addition, to analysts anticipating that the organization's earnings will develop at an exacerbated yearly development rate of almost 17% for the following five years, there's a possibility that Lululemon's situation will enhance going ahead.