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Reuters
Published
Oct 19, 2010
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Lululemon shares seem overvalued: Barron's

By
Reuters
Published
Oct 19, 2010

(Reuters) - Despite continued interest in yoga and a recent stock rally, Lululemon Athletica Inc (LULU.O) shares seem overvalued, according to a report in Barron's financial newspaper.

Lululemon
An in-store yoga class is from Lululemon Galleria in Dallas, Tx

The Vancouver-based company, which primarily markets clothing for yoga classes, has seen its stock rebound from $4.50 in March 2009 to Friday's close of $46.03, though senior executives have unloaded about one million shares in the past six months, according to a report in the October 18 edition.

Several analysts aren't sure the company's business model can sustain itself, with one analyst noting Lululemon is "basically selling a $1 piece of spandex for $100," the report said.

Also, yoga seems to have hit a peak in interest a few years ago, with post-recession growth in the sport only 6 percent per year, compared with 10 percent annually from 2005 to 2008. However, Lululemon expects to open 20 to 25 stores this year, Barron's reported.

The company currently operates 130 stores across the United States, Canada and Australia, as well as a retail website.

(Reporting by Ernest Scheyder)

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