Ticker Talk: Lululemon Atheltica (LULU)

10:30 AM

Photo by  sushi_zume

In 1998 Lulumon Athletica opened their doors offering high end yoga and womens sports wear. Nearly 10 years later the company was seeing increasing profits and took the opportunity to take their company to the stock market. In July of 2007 LULU (NASDAQ) garnered $18 during its IPO, surpassing early expectations of $10-12 per share. 

Today LULU trades at around $81, a nice increase over the last six years. However, In March 2003, Lululemon took a big hit when a bad batch of yoga pants triggered a nationwide recall of nearly 17% of their inventory. The pants were unintentionally see through, and reports of store associates requiring customers to try on the pants and bed over to receive their refund severely hurt the reputation of the retailer.

At the height of the controversy, stock prices at LULU fell to $62 but it's made a swift recovery which I think speaks a lot to the loyalty and quality of the brand. LULU is trading higher than ever and their ubiquity in New England yoga studios and among young affluent moms is showing no signs of slowing.

I think LULU is a strong investment and is worth holding in a portfolio for a few more years. Would you consider investing in LULU despite its recent issues?

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