Feedback on Lululemon Athletica; Every major asset class is up so far this year; Controlling my spending by staying in a hostel
1) I got quite a bit of insightful feedback from readers on yesterday's e-mail about athleisure company Lululemon Athletica (LULU) that I'd like to share...
Robert H. wrote:
Appreciate your follow up on Lulu. It's been a roller coaster for me, as I bought into it early in COVID, saw it climb, and now am sitting on paper losses.
Two comments on the "quick analysis" you shared:
1) The fact that the garments last a while is a challenge, as I'm sure there are many customers like you and me who don't replenish their wardrobes often enough because the products last.
2) I'm not certain Athleta is a fair comp because as you suggest, it's an inferior product. On Cloud, Alo Yoga, Fabletics, and Vuori are the real competition taking share from Lulu because they also have great products at similar price points. Not to mention Chinese competitors which sell at a steep discount relative to Lulu. CRZ Yoga is one example. I bought their pants for $45 and they are a great product (but they don't have any customer service, so I had to be certain they were the right size).
Jimmy M. agreed:
I don't think that Athleta is a proper comp. Vuori or Alo is the better comp in my opinion and while neither is publicly traded, it seems that they are taking serious market share from LULU. It seems that more and more people that I'm talking with or seeing with my own eyes have moved on to Vuori and Alo as opposed to Lulu.
That being said, I always pay attention to what my kids want to wear and make it a point to stop by every LULU store I can to get a pulse on what the traffic looks like. I even visited one in Rome when I was there earlier this month. There are definitely customers there but I wonder if the brand is as impenetrable as we might be giving them credit for.
Murali L. noted:
My sense is LULU has underinvested in parts of the business. As a result, the company likely shows much higher earnings today that we will likely see in the near future. Great products, but distribution needs significant investment to keep up growth!
I asked two of my daughters what they thought of these comments. They replied:
I'd agree that Vuori or Alo are definitely better comps than Athleta – it's a different audience.
I've never shopped at Vuori but it's popping up everywhere – they have at least four NYC locations now from zero not long ago. And there are many on the West Coast as well. [Here's a map of store locations from Vuori's website.]
Alo and Vuori definitely do more influencer-focused campaigns and have trendy fits and matching sets (more athleisure). In contrast, Lulu focuses more on athletes in their branding – I feel like their clothes are more for exercising. Vuori has a campaign with Kaia Gerber, a model, whereas Lulu has Hannah Berner and Matt James, both former top athletes in college.
Regarding the products, one of my daughters commented:
I would never buy leggings from anywhere but Lulu – they're elite. Athleta has the worst leggings ever.
But I love Alo skirts and bras – they're much better than Lulu's in my opinion.
Thank you all for the feedback. This gives my team and I plenty to dig into as we analyze LULU and decide whether to recommend it in Stansberry's Investment Advisory.
(If you aren't already a subscriber, you can learn how to become one right here.)
2) Both the S&P 500 Index and the Nasdaq Composite Index hit all-time highs yesterday – and they're not the only ones.
As Charlie Bilello notes in his latest Week in Charts, every major asset class is up so far this year – for the first time since 2019:
It's rare to see the Fed ease monetary policy into rising inflation and a melt-up in the equity/credit markets. And investors are absolutely loving it.
Are investors crazy to be so euphoric? I think not...
The government is spending like mad, the Federal Reserve is expected to cut interest rates, and the economy is hot.
As the chart below from social platform X shows, the Atlanta Fed is projecting third-quarter GDP will be up 3.4%, far above consensus expectations:
I've said it many times before: When you're in a bull market, ride it – at least until it's clear that a recession is underway or a bubble is bursting... And I'm not seeing that right now.
3) On Friday, I shared my advice on how to save enough to have a comfortable retirement. One key is to "control your spending such that you live beneath your means."
As proof that I practice what I preach...
For my stay in Jackson, Wyoming this week for my climb of the Grand Teton, I'll be sleeping with two dozen strangers in a big hostel room full of bunk beds.
It's ridiculously expensive at $175 per night (most hostels I've stayed in around the world were $50 to $75). But that's far less than the truly outrageous $400 per night it would cost for the cheapest motel in the area.
I can't do this when I'm traveling with my wife. But when I'm on my own, I'm perfectly happy to relive my college days backpacking around the globe!
Here's a picture of the beds in the hostel:
Best regards,
Whitney
P.S. My special broadcast with Joel Litman, founder of our corporate affiliate Altimetry, airs tonight at 8 p.m. Eastern time.
In it, we'll expose what could be the single greatest moneymaking anomaly in the U.S. stock market today – and how you can leverage it for yourself.
You won't want to miss this big broadcast... Click here to reserve your spot to see it.
P.P.S. I welcome your feedback – send me an e-mail by clicking here.