HedgeyeRetail (2/22) | Idea List - Moving LULU Up On Short Side

Takeaway: We're moving LULU up a few notches on the core short idea list. FL Black Book on Wednesday @ 1pm ET.

FL | Black Book Ahead of the Print

Wednesday, @ 1PM ET

For Full Details CLICK HERE

 

Hedgeye Retail Idea List - Moving LULU up on the short side.

 

We're moving LULU up a few notches on the core short idea list. The stock is working for the year-to-date, but fundamentally, we still think that this is a very good brand housed within a bad company. Management is shooting to get back to a mid-50s gross margin, which is admirable. But the company has to invest in talent, distribution, branding, and e-commerce capability -- all which will A) take margins down, B) subsequently repair the top line (in 2+ years), and then, and only then will we even think about paying for a 'margin improvement story' here -- especially with UnderArmour and Nike committing incremental capital to women's fitness.  We still think there is a meaningful management shake-up this year at LULU.

HedgeyeRetail (2/22)  |  Idea List - Moving LULU Up On Short Side - 2 22 16 chart1

 

W - Wayfair adding office space, + 1,400 employees.

(http://www.pressherald.com/2016/02/18/wayfair-to-bring-nearly-1000-jobs-to-maine/)

(http://investor.wayfair.com/investor-relations/press-releases/press-releases-details/2016/Wayfair-to-Create-450-Jobs-in-Bryan-College-Station-Texas/default.aspx)

 

Various news sources have reported 3 new office building for Wayfair (2 in Maine, 1 in Texas) over the past couple of days equaling an addition of 1400 employees. That equates to an increase of 43% from current levels. Just another example of the company investing in the infrastructure to recognize a $90bn TAM that we think is overstated by as much as 50%.

 

NKE - Nike officially opens doors for Jordan Brand store located in the Central District of Hong Kong, complete with wall of all-gold Air Jordans

(http://solecollector.com/news/2016/02/jordan-8-wellington-hong-kong)

 

Fast-growing Kit and Ace seeks top executives after CEO let go

(https://www.biv.com/article/2016/2/fast-growing-kit-and-ace-seeks-top-executives/)

 

Toys "R" Us - Toys "R" Us trying to replace $1.6 billion in junk-rated bonds coming due through 2018

(http://www.wsj.com/articles/toys-r-us-poses-a-test-for-junk-bond-markets-1456099656)

 

Sperry named official footwear of SoftBank Team Japan for 35th America’s Cup

(http://footwearnews.com/2016/focus/athletic-outdoor/sperry-shoes-americas-cup-sailing-competition-194264/)

 

MarineMax annoucned 1.25mm share repurchase program -- will replace April 2015 1mm share program, of which 772,716 shares had been repurchased

(http://www.businesswire.com/news/home/20160222005303/en/)

 

American Apparel head of manufacturing Martin Bailey resigns after 15 years

(https://fashionunited.com/news/people/martin-bailey-resigns-as-head-of-manufacturing-for-american-apparel/2016021910278)

 


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