Lululemon stock doubles in debut
Shares of Lululemon Athletica Inc. spiked more than 50 percent on its first day of trading on Friday. The yoga-clothing retailer raised $327.6 million (much more than anticipated) in Canada’s largest initial public offering this year. The company’s stock closed at $29.72 on the TSX (”LLL”), and at $28 on the NASDAQ (”LULU”). The company expected its shares to trade at $10 to $12 a share. It was evident that the public was very interested in the company’s shares.
Lululemon, already an established brand in Canada, only has 17 stores south of the border. Along with those stores, and the 38 located here in Canada, Lululemon tripled its sales in two years. Right now, its growth strategy leans heavily on expansion to the U.S.
Chip Wilson, the company’s founder, started a business selling surf, skate and snowboard equipment in 1980, remaining Westbeach Snowboard Ltd.’s chief executive officer until 1995. He turned to yoga after taking a class in Vancouver on the stretching and breathing exercise based on Hindu philosophy. Wilson founded the company in 1998, and very quickly began its rapid expansion.
Lululemon offers a unique and differentiated brand - one that spells out success. Whether Lululemon lives up to expectations, we are yet to see. With society’s healthy living concerns today, and Lululemon’s alignment with that trend, I bet my money on its success.
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Brief Company Overview:
Lululemon Athletica Inc.; Close: $29.72 (Cdn.), up 73¢
Niche:Â Trendy yoga gear for the yummy mummy set.
History:Â The first store opened in Vancouver’s Kitsilano district in 2000. The concept was to create a community hub where people could learn and discuss healthy living, from yoga and diet to running and cycling.
Stores:Â 38 in Canada, 17 in the United States, 2 in Australia and 3 joint ventures in Japan
Stock symbol:Â LLL (TSX), LULU (Nasdaq)
Offering price:Â 18 (U.S.), up from an initial target range of $10-$12
Intraday high:Â $28.64
Closing price:Â $28, up $10 on the day
Strategy:Â The company wants to add 25 stores in North America this year, 35 in 2008.
Details:Â Lululemon had planned to raise about $200-million in the offering, with new investors having a 26-per-cent stake. The company had mulled reducing the size of its IPO but this week decided to keep the offering at 18.2 million shares.
2006 financials:Â The company reported annual revenue of $149-million (U.S.) for the fiscal year ended Jan. 31, up from $84.1-million (U.S.) in revenue the previous year.
2007 Q1 financials:Â The company reported first-quarter revenue of $44.8-million (U.S.) on April 30, compared with $28.2-million (U.S.) for the same period last year.
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