• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: This latest news from Lululemon is right in line with the bullish thesis Hedgeye retail sector head Brian McGough outlined on June 25th.

LULU - Lululemon Founder Explores Buyout

From the Wall Street Journal:


"Advisers to Lululemon Athletica Inc. founder Dennis "Chip" Wilson have been sounding out private-equity firms, including Leonard Green & Partners, about taking the yoga-gear maker private..."

Lululemon Founder Explores Buyout (Right In Line With Our Bullish $LULU Thesis) - lululemon chip wilson

Takeaway from McGough: Right in line with our thesis -- keeping in mind that a buyout is the least likely of all the outcomes we outlined on June 25th when we presented why LULU is worthy of being on our Best Ideas List as a long. We think that a strategic buyer is twice as likely as a 'Chip-led and PE-supported' buyout.

But the greatest likelihood is that Wilson fails outright in his effort to control or sell the company, and he therefore defaults to selling all his stock. That's the highest return move for shareholders. See our separate LULU note from this morning for our rationale.

Lululemon Founder Explores Buyout (Right In Line With Our Bullish $LULU Thesis) - image003

(Editor's note: Send an email to sales@hedgeye.com if you would like more information on how to access Hedgeye research.)