What is Lululemon Athletica Predictability Rank?
4 (5)
Warren Buffett said many times that the companies he likes are:
1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.
It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.
GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.
Lululemon Athletica Predictability Rank Calculation
In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.
Our study may be subject to these biases and assumptions:
Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.
The correlation between business predictability and investment returns of a company is showed below.
Correlation Between Business Predictability and Investment Returns
| Predictables | Non-Predictable | All stocks |
|---|
| Total Number of stocks | 570 | 1833 | 2403 |
| Total Lost Money | 61 | 830 | 891 |
| Total Lost More Than 50% | 18 | 412 | 430 |
| Total Lost More Than 90% | 4 | 86 | 90 |
| Average Gain | 260.6% | 100.0% | 138.1% |
| Median Gain | 150.0% | 13.0% | 39.0% |
| Maximum Gain | 2852.0% | 11483.0% | 11483.0% |
| Maximum Loss | -100.0% | -100.0% | -100.0% |
| Annualized Average Gain | 12.7% | 6.7% | 8.4% |
| Annualized Median Gain | 8.9% | 1.1% | 3.1% |
For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.
| Predictability Rank | 5-Star | 4.5-Star | 4-Star | 3.5-Star | 3-Star | 2.5-Star | 2-Star | 1-Star (non-predictable) | Average among all |
|---|
| % Out of All 2403 Stocks |
3.3% |
2.9% |
3.7% |
3.3% |
3.3% |
3.7% |
3.3% |
76.3% |
100% |
| % that are in Loss (10y) |
3% |
10% |
8% |
9% |
11% |
18% |
16% |
45% |
37% |
| Average Gain (10y) |
364.6% |
330.9% |
278.0% |
235.1% |
243.5% |
227.8% |
154.8% |
100.0% |
138.1% |
| Median Gain (10y) |
238.5% |
193.5% |
171.0% |
159.0% |
132.5% |
113.5% |
87.0% |
13.0% |
39.0% |
| Maximum Gainer |
2228.0% |
2547.0% |
2452.0% |
2852.0% |
2432.0% |
1892.0% |
1807.0% |
11483.0% |
11483.0% |
| Maximum Loser |
-82.0% |
-53.0% |
-67.0% |
-100.0% |
-83.0% |
-100.0% |
-78.0% |
-100.0% |
-100.0% |
| Annualized Average Gain |
15.4% |
14.6% |
13.2% |
12.0% |
12.2% |
11.7% |
9.1% |
6.7% |
8.4% |
| Annualized Median Gain |
12.1% |
10.6% |
9.8% |
9.3% |
8.2% |
7.3% |
6.0% |
1.1% |
3.1% |
For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Lululemon Athletica Business Description
Traded in Other Exchanges
Address
1818 Cornwall Avenue, Vancouver, BC, CAN, V6J 1C7
Lululemon Athletica designs, distributes, and markets athletic apparel, footwear, and accessories for women, men, and girls. Lululemon offers pants, shorts, tops, and jackets for both leisure and athletic activities such as yoga and running. The company also sells fitness accessories, such as bags, yoga mats, and equipment. Lululemon sells its products through more than 700 company-owned stores in about 20 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.
Executives
| Nicole Neuburger |
officer: Chief Brand Officer |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Calvin Mcdonald |
director, officer: Chief Executive Officer |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Morfitt Martha A M |
director |
P.O. BOX 1441, MINNEAPOLIS MN 55440-1441 |
| Meghan Frank |
officer: Chief Financial Officer |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Celeste Burgoyne |
officer: Pres Americas&Global Guest |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVE, VANCOUVER A1 V6J 1C7 |
| Shane Grant |
director |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Michelle Sun Choe |
officer: Chief Product Officer |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVE, VANCOUVER A1 V6J 1C7 |
| David M Mussafer |
director |
C/O ADVENT INTERNATIONAL CORP, 75 STATE ST 29TH FLOOR, BOSTON MA 02104 |
| Isabel Mahe |
director |
ONE APPLE PARK WAY, MS169:2CL, CUPERTINO CA 95014 |
| Kathryn Henry |
director |
C/O LULULEMON ATHLETICA, INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Kourtney Gibson |
director |
C/O MARKETAXESS HOLDINGS INC., 55 HUDSON YARDS, 15TH FLOOR, NEW YORK NY 10001 |
| Alison Loehnis |
director |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J1C7 |
| Andre Maestrini |
officer: EVP, International |
C/O LULULEMON ATHLETICA INC., 1818 CORNWALL AVENUE, VANCOUVER A1 V6J 1C7 |
| Stephanie Ferris |
director |
C/O VANTIV, INC., 8500 GOVERNORS HILL DRIVE, CINCINNATI OH 45249 |
| Martin Michael Casey |
director |
|
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