Moving east
Other apparel companies should probably be happy that a rising competitor has lost its leadership for a while.
NIKE, Inc. (NYSE:NKE), up 21% this year, has been successful in dealing with numerous competitors in its different product categories and geographies. Nike’s stronghold is North America region, which grew 18% in the last quarter.
Nike is struggling to get its China business moving too. China is extremely attractive, and Nike thinks the country is an important part of its long-term growth plans.
Under Armour Inc (NYSE:UA), up 23% this year, considers Asia important, too. The company states that it sees tremendous opportunities for the brand outside of the United States. You’ll see more and more companies rush to get the growing Asian customer base. The ones who would manage to establish their names faster would be the winners.
So, Lululemon Athletica inc. (NASDAQ:LULU) loses its CEO when it is entering new markets and its competitors are battling for the same markets too. How does it affect the bottom line?
Bottom line
Christine Day would stay as a CEO until the new one is found and she would ensure a smooth transition. Lululemon has built a strategy, and, at least at the short term, the momentum would continue, with Christine, or without her. The future of the company’s growth woud depend on its ability to conquer foreign markets.
Right now, the stock is trading at a 26.40 forward Price-Earnings (P/E) multiple, while NIKE, Inc. (NYSE:NKE) is trading at a 20.31 forward P/E and Under Armour Inc (NYSE:UA) is trading at a 32.57 forward P/E. Nike is the only company of these three that pays a dividend, yielding 1.35%.The departure of CEO during expanding both in product categories and geographically would certainly hurt Lululemon Athletica inc. (NASDAQ:LULU).
Among these three companies, NIKE, Inc. (NYSE:NKE) looks like the best place to put your money. You get the cheapest valuation plus the dividend. NIKE, Inc. (NYSE:NKE) is the most diversified company, which makes products in different categories and sells them all over the world. Nike’s marketing machine would help the company further expand its presence, while making it harder for competition to battle for their piece of the pie. In addition to that, Nike is the strongest player in the key North American market.
Lululemon Athletica inc. (NASDAQ:LULU)’s ship is about to lose is captain. No wonder investors are worried about that. I would like to see the next quarterly results before considering buying the stock.
Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica, NIKE, Inc. (NYSE:NKE), and Under Armour Inc (NYSE:UA). The Motley Fool owns shares of Nike and Under Armour.
The article Lululemon in Danger After CEO Leaves originally appeared on Fool.com.
Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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