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Better Buy: Lululemon vs. Under Armour

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The athletic apparel industry is a ripe field to look for promising growth stocks, and at various points in the recent past, both lululemon athletica (NASDAQ:LULU) and Under Armour (NYSE:UA) (NYSE:UAA) have looked like they fit that description.

Over the last decade, Lululemon has grown enormously. What started out as a niche maker of premium yoga wear for women has branched out into running, men’s apparel, and even everyday apparel. The stock has climbed 270% over the last five years. 

About 10 years ago, Under Armour looked like it was developing into a serious challenger to Nike‘s dominance, but that challenge collapsed in 2017, when department stores and other retail partners that sell Under Armour’s product started to seriously struggle with the rising threat of e-commerce. The company, which was largely dependent on the North American wholesale market, was unable to shake this weakness, and the stock has fallen 80% over the last five years. 

The global sportswear industry provides a massive opportunity for smaller players like Lululemon and Under Armour, but in an economic environment that has suddenly become even more difficult, which is the better buy?

A young woman wearing athletic clothing while running.

Image source: Getty Images.

Under Armour’s too reliant on other retailers

The problem for Under Armour is that most of its sales are generated through wholesale channels. Last year, apparel accounted for nearly 70% of its sales, while 22% came from footwear. Sales of apparel increased just 0.2% in 2019, while footwear grew 2.2%. 

Under Armour generates 31% of its annual revenue from direct-to-consumer channels, with e-commerce responsible for a low double-digit percentage of total revenue. 

Under Armour’s biggest competitor, Nike, also generates most of its sales through wholesale partners, but even before the COVID-19 outbreak, Nike was growing its revenue faster than Under Armour. That was a reflection of product and marketing issues with the brand, both of which will be difficult to fix. 

Making matters worse for the company is the coronavirus economy. While nearly all stores are open again in China, most stores that carry Under Armour in North America remain closed. The wholesale market for the company’s gear was already weak going into the crisis, but the shutdown of malls and nonessential retailers has hit department stores hard — Neiman Marcus has already been pushed into bankruptcy. 

The combination of Under Armour’s dependence on struggling wholesale partners and the broader trend of lower consumer spending in the near term will make it awfully tough for the company to rebound anytime soon.

Lululemon controls its own destiny

By contrast, Lululemon has done more than successfully position itself as a premium brand in sportswear — it has built that success through its own sales channels. Over 90% of its revenues come from company-operated stores and direct-to-consumer channels — the online store and mobile app. 

Lululemon’s revenue has more than doubled over the last five years, while Under Armour’s top line has increased by just 46%. And in the last three years, Under Armour’s revenue has been essentially flat. Lululemon has managed to outperform its peer despite charging premium prices. Through its advanced fabrics that are designed via its “science of feel” method, it has cultivated a loyal following of customers who swear by its products’ quality.

LULU Revenue (TTM) Chart

LULU Revenue (TTM) data by YCharts

Expectations for 2020

Lululemon will have a rough year, too. It had 491 company-owned as of February. The direct-to-consumer channel, which previously accounted for only 29% of Lululemon’s business, won’t be able to offset all the revenue loss. However, Lululemon has started to reopen stores on a case-by-case basis as local governments allow. 

For what it’s worth, the analysts’ consensus its that Lululemon’s revenue will rise just 1.9% in fiscal its 2020 (which ends in January), while Under Armour revenue is expected to fall 13.6% this year. 

Both companies are strong financially, although Lululemon is in slightly better shape. As of the most recent quarter, Under Armour held $959 billion in cash and equivalents on its balance sheet and $593 million long-term debt. But Lululemon had $1.094 billion in cash and zero debt. That’s one more check in Lululemon’s column. 

Going with Lululemon

All in all, Lululemon is in a much stronger competitive position. The quality of its product and its ability to sell through company-owned channels allows for higher full-price sell-through, which keeps profits up and gives the retailer a premium perception. That’s reflected in the stock’s rich valuation, which is considerably higher than Under Armour’s on traditional metrics like price-to-earnings ratios.

Yet even with its arguably more attractive valuation, I would avoid Under Armour for now. Operationally, Lululemon’s advantages are too large to ignore, and so I’d be more inclined to buy Lululemon stock instead.


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Fashion & Style

CBD Oil Extra Boost

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on the / Can CBD Oil Give you an Extra Boost?

Can CBD Oil Give you an Extra Boost?

We all need a bit of a pick-me-up every so often. We reach for the strong coffee or, heaven forbid, one of a large variety of chemical heavy energy drinks. After a few sips, the energy boost kicks in: heart rates begin to beat a faster rhythm, and focus and motivation sharpen noticeably. It gets us through the day and keeps us productive. However, this is quite an untenable way to boost your energy. Most energy drinks rely on stimulants like caffeine or taurine. If nothing else, our bodies adapt to these over time, so we then need to take mega-doses just to remain at equilibrium, and adding to our energy levels takes even more on top of this. In addition, it’s unhealthy to put your heart through such a large amount of stimulant use. Dehydration occurs as a result of the diuretic nature of many stimulants, and we ultimately burn ourselves out.

So, what should you use instead of energy drinks? Well, luckily there are safer, more effective ways to boost your energy. These include cannabidiol (CBD oil). CBD oil is growing in popularity and good quality sources can be found both on the high street and online. The most popular products being CBD oils, capsules, cream and even CBD gummies such as the UK’s recently launched ZenBears. But do they really work?

CBD oil: what it does, and how it does it  

Past data and current research are solidly building a case for CBD oil and its therapeutic benefits, including its ability to deliver good quality, long-lasting energy.
CBD oil is the non-psychoactive component of the cannabis plant. This means that the health benefits of taking it will not be accompanied by any nasty side effects such as being ‘stoned’, suffering psychosis and paranoia, changes in mood and perception etc.
To emphasise, CBD oil contains no tetrahydrocannabinol (THC- the psychoactive element of cannabis), so it does not have any psychoactive properties. Many people are beginning to take CBD oil seriously. Even top athletes are beginning to incorporate it into the supplement regimes, alongside stalwarts like creatine and omega 3. Part of the reason for this is the guilt-free energy kick CBD oil delivers. Energy drinks and coffee inject caffeine into your system, among other stimulants. This alters nerves and receptors, giving you something of a false feeling of energy e.g. the ‘buzz’ we’ve all experienced. CBD oil, on the other hand, supports the cells that make you feel fatigued, via the endocannabinoid system (ECS).
The ECS allows CBD oil to elicit a range of processes. CBD oil interacts with endocannabinoid receptors by stimulating and supporting. Cannabidiol has such a positive range of effects that it can be considered a wake-promoting agent. Through this system, your body will be able to better regulate the affected bodily functions, including: appetite, sleep, mood and anxiety, metabolism and energy balance, production of hormones, immune and pain system response, stress, learning and memory.

In particular, CBD oil’s ability to improve the metabolism and energy balance, alongside its benefits to healthy sleep, reduction of stress and immune function, allow users to experience long-lasting energy without the spikes and falls so commonly associated with stimulants. Maintaining a healthy ECS system will keep all of these functions working in your favour, leaving you feeling healthier, less fatigued and far more mentally alert.
Microinjections of CBD into the hypothalamus have been shown to activate neurons and elicit heightened levels of dopamine, a hormone intimately related to happiness, energy and alertness. Indeed, regular usage of CBD oil has been linked to improved dopamine levels.
The antioxidant properties of CBD oil make up an additional benefit. Organic molecules (our constituent parts, essentially) become damaged and break down over time. They lose electrons and become free radicals, which have the ability to cause great harm (a heightening risk of cancer being chief among them). Antioxidants diminish the presence of free radicals, and are themselves a contributing factor to improved energy levels.

How to use CBD oil for maximised energy 

Of course, we will all react to CBD oil differently. For some of us, it may have no effect whatsoever, whilst others will find their lives being completely changed by it. Because of this, it’s a good idea to start out with lower doses, building over time. As you do this, take notes using a diary, keeping track of the following:
 

1. The type of CBD supplement you take. 

2. The amount of CBD you use in a day (in milligrams). 

3. When you take your supplements. 

4. The changes in mood, outlook and energy levels when taking CBD oil. 

5. Any sensations you experience when taking the supplement. 

This way, you’ll be able to see reasonably objectively what CBD oil is doing for you, the best doses, and how you are perceiving your own energy levels.
Generally, however, just relax and look forward to the benefits. CBD oil consumption should enable you to think more clearly, with greater focus and less lethargy, than ever before. You should find your energy levels heightened and stabilised, your mood improved, and your sleep patterns adjusted for you to make the most of your rest. You will have more energy, without having to rely on any stimulants.


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Louis Vuitton, Chanel, Fendi and more luxury stores looted amid protests over George Floyd’s death 

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As the situation in parts of the United States is growing worse with raging protests over the racism against George Floyd’s death, stores have been looted and vandalised by protesters.

Louis Vuitton, Chanel, Fendi and more luxury stores looted amid protests over George Floyd's death Louis Vuitton, Chanel, Fendi and more luxury stores looted amid protests over George Floyd’s death 

The raging protests are only growing every day following George Floyd’s death. The death of the African-American person who was in police custody has caused unrest in parts of the United States. In cities like New York, Chicago, Minneapolis etc.there have been massive protests and outbreaks of violence. Curfews have been imposed across multiple states to try and curb the violence. The National Guard has also been called but it seems like the situation is just getting worse.

Protesters have taken to the streets and multiple properties including restaurants, public properties and luxury retail stores have been damaged in the process. Luxury stores like Louis Vuitton, Gucci, Fendi. Alexander McQueen, Hermes, Chanel, etc. have been looted and vandalised. Statements like “Eat the rich”, “F*** the police”, “F*** Trump”, “Living in hell” and “The Revolution is coming”, were spray painted across multiple luxury retail stores in photos that popular Instagram page Diet Prada uploaded.

Protesters with their faces covered to keep their identities hidden, have also been looting the stores and practically running away with products, leaving all of them practically empty! 

While questions have been raised about how looting luxury retail stores help in aiding protests, others say that there is no one way to protest. The idea is to get attention to the issue and make a statement. 

What are your thoughts on the ongoing events? Comment below and let us know. 
 


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Fashion & Style

Style findings: Kiko Kostadinov and Asics’ sneaker nods to tennis

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Courtside style

1 June

There’s something space age about Kiko Kostadinov’s latest trainer collaboration with Asics. The womenswear style, designed by Laura and Deanna Fanning brings together the Gessirit sneaker silhouette, with a 2003 tennis model, the Excourt, which was noted for its quilted upper and lack of logo. The result is an eye-catching multi coloured style, with spacey Gel pod detailing which alludes to Asics history of material innovation. We’ll be hitting the tennis court in this cream pair, accented with pops of yellow, metallic blue and red. Game, set, style match.

Writer: Laura Hawkins

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