The Gap Inc. (GPS), VF Corp (VFC): Lululemon Athletica inc. (LULU)’s Sizes Do Not Fit All

Here’s another reason Lululemon’s behind the curve. There’s an increasing push for fashion to acknowledge that being a size 12 or over isn’t something to be ashamed of. More consumer brands are realizing that “normal” or plus-sized women are beautiful, too. H&M recently used size 12 model Jennie Runk in a plus-size swimwear ad, which displayed a beautiful, curvy woman in a bathing suit. The average American woman is a size 14, in fact. Women come in all shapes and sizes.

This stock is not a beautiful investment
Beauty is in the eye of the beholder, there are many forms of “beautiful,” and, most of all, pretty is as pretty does. It’s sad to think that some people still have to be convinced that plus-sized women are just as attractive as thin ones. At different times in history, curves and heavier weights were considered incredibly attractive.

For example, Marilyn Monroe was no waif. She is still one of the most popular icons of beauty, yet still the definition of beauty has emphasized thin.

The ridiculous part of this from an investing standpoint is that if the average American woman indeed wears a size 14, Lululemon is actually shutting out a significant portion of the market. If more women shun its stores because of budgetary constraints or even the sizing controversy, and other women can’t find any clothing there that fits, this stock is even more overvalued than one might think.

Lululemon Athletica inc. (NASDAQ:LULU)’s forward price-to-earnings ratio is a hefty 27, compared with The Gap Inc. (NYSE:GPS)’s 14 and VF Corp (NYSE:VFC)’s 16. Although neither of those companies is an apple-to-apples comparison, since both have many brands and concepts under their umbrellas, the diversity also makes them more than one-trick ponies.

The Gap Inc. (NYSE:GPS) and VF Corp (NYSE:VFC) may not have the most torrid growth in the world in the last 12 months, but both have displayed solid growth in sales and profits. VF Corp (NYSE:VFC)’s profitability is particularly impressive. They’re also arguably more stable than Lululemon on many levels. The Gap Inc. (NYSE:GPS)’s not always the hippest game in town, but it’s a stable company with recognizable concepts, and VF Corp (NYSE:VFC) has incredibly strong brands including Timberland, The North Face, Smart Wool, and many more.

We’re learning about some less attractive factors regarding Lululemon, as a retailer and as an investment. Lululemon leaves some women out, so maybe investors should leave Lululemon alone.

The article Lululemon’s Sizes Do Not Fit All originally appeared on Fool.com and is written by Alyce Lomax.

Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.