This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Lululemon Stock Pops as Founder Chip Wilson Stirs the Pot

NEW YORK (TheStreet) -- Lululemon's (LULU - Get Report) stock is popping on Monday morning after the Wall Street Journal reported founder Denis "Chip" Wilson was reaching out to Goldman Sachs (GS - Get Report) for help in regaining the company.

At midday the stock was up 3.7% at $41.71.

Wilson has a long relationship with Goldman from the days the banker took Lululemon public in 2007. For now, the Goldman rating is a neutral and the company has not issued any public statement.

Lululemon's stock that has lost over a third of its value in the past 12 months.

"It's been a horrific year for the company," said David Nelson, Chief Strategist at Belpointe Asset Management.  "Just about everything that could go wrong has. Sales are deteriorating and the company has suffered a blow regarding quality." Anecdotally, Nelson even observed that business at the Lululemon in his town used to be brisk on the weekends, but this past weekend it was empty.

Lululemon Rated a Hold.

Wilson hasn't endeared himself to his customer base. Women were offended by his comments that the quality issue was due to overweight women trying to wear the clothes. Equally offensive, Wilson said he named the company with "L's" because he was amused at hearing Asians trying to pronounce it. In an era of growing customer demand for social responsibility among clothing lines, he has advocated child labor and once said that smoking and birth control pills lead to high divorce rates. 

Nelson believes the stock is just too expensive saying, "It isn't cheap trading at 22x this year's consensus. " Nelson also noted that last week a number of analysts threw in the towel and downgraded the stock with estimates coming down as well. "One potential suitor could be VF Corp. (VFC) , because they already have a presence in athletic wear," said Nelson.


1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
GS $196.61 0.05%
LULU $64.62 -1.40%
AAPL $131.08 -1.20%
FB $81.04 -1.10%
GOOG $554.42 -0.17%

Markets

DOW 18,080.61 +42.64 0.24%
S&P 500 2,111.89 +2.97 0.14%
NASDAQ 5,056.73 -3.5160 -0.07%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs