Lone Pine Capital ups Stake in Lululemon after Yoga Pants Fiasco

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Lone Pine Capital now owns a 5 percent stake in Lululemon Athletica inc. (NASDAQ:LULU) according to a 13G filed with the SEC. The hedge fund, which owned 4.3 percent of shares bought more on April 5th, when the stock was trading at around $63 a share, today shares closed at $69.14. Shares of the clothes maker fell due to the release of its ‘controversial’ see through Yoga pants, which were pulled from stores. Steve Mandel’s Tiger cub likely saw value and scooped up stock as shares fell on the Yoga pants fiasco. On April 8th, Thornburg Investment Management Inc. disclosed a 10% stake in Lululemon Athletica inc. (NASDAQ:LULU).

According to a recent report from Sterne Agee:

Historically, complaints about sheerness were ~1%, but in mid March is suddenly grew to 10%, and the pants were pulled from the stores. There is an outside chance that new up to standard Luon pants could be in stores in 4 to 6 weeks. The product testing was near completion under the new standards, and new product was in production. However, LULU needs new production capacity so not to interfere with fall ’13 production, which is in high gear. Ms. Waterson was well though of, but was not the person to scale up the organization for its future growth. Her job will be split going forward into a head of design and head of production. LULU should provide further updates in 4 to 6 weeks.


For the fiscal year ended 03 February 2013, Lululemon Athletica inc. revenues increased 37% to $1.37B. Net income increased 47% to $270.6M. Revenues reflect Corporate-Owned Stores segment increase of 33% to $1.09B, Direct to Customers segment increase of 86% to $197.3M, Other segment increase of 7% to $82.9M, United States segment increase of 57% to $839.9M, Canada segment increase of 8% to $461.6M.


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