Apparel maker Lululemon Athletica ( LULU) is on the exciting end of a big trend in sportswear. The firm was a pioneer in the yoga apparel niche, launching stylish workout gear at the exact same time yoga started to become extremely popular with American consumers. Today, the Vancouver-based firm also boasts more than 220 retail stores spread across the U.S., Canada, Australia and New Zealand.
Lululemon's position in the market gives it the ability to collect premium prices for its merchandise -- and it shows. The firm generated around $2,000 per square foot of retail space at its company owned stores last year, making it one of the most productive apparel sellers out there. Third-party sales channels offer LULU a zero-risk way to move its workout gear, especially as competitors vie for LULU's customers and brand fragmentation becomes more apparent. As Lululemon moves from being a yoga-wear maker into more general athletic apparel its strong brand should help it maintain a niche advantage.Despite its upside prospects, LULU is best known on Wall Street for being a volatile name. That's helped push its short interest ratio to 11.9, a level that makes it a short squeeze candidate. Any hint of earnings surprise next week could spark fast buying. Keep an eye on this one.
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