Mostly Borrowed Ideas Deep Dives, MBI Deep Dives

MBI Deep Dives

Mostly Borrowed Ideas Deep Dives

MBI is the abbreviation for “Mostly Borrowed Ideas”. Why “Mostly Borrowed Ideas?” As a generalist, I do not have a background in any particular sector. I enjoy navigating across industries, businesses, and countries to learn, understand, and connect the dots. In any case, most ideas and innovations are incremental in nature. Very few of us are smart enough to come up with truly original or groundbreaking ideas. I am Abdullah Al-Rezwan. I was born and brought up in Bangladesh. I went to University of Dhaka for my undergrad and majored in Finance. After working three and half years in Equity Research (Sell-side) covering Financial Sector in Bangladesh, I left Bangladesh to pursue my MBA in the US. I graduated within top 10% of the class from Cornell University's two-year MBA program and worked on the buy-side following my graduation. During my time at Cornell, I won two stock pitch competitions and also became finalists in four other competitions. I thoroughly enjoyed my stint as a generalist in the US large cap team at Madison Investments and covered a wide range of companies from UnitedHealth to Amazon and Boeing before US immigration reality paused my career in investment management. As my work authorization expired, I moved to Canada in January, 2021. Then in early 2022, I was able to return to the US.

Equity Bottom-Up

<ul><li>Lululemon was facing some really thorny questions from Mr. Market ever since 4Q’23 earnings. Today’s earnings should help calm some nerves.</li><li>Here are my highlights from tonight’s call. Sales Growth by Region At first glance, one may find confirmation to plenty of concerns for LULU. US sales, which was ~61% of overall sales this quarter, grew by only 2%.</li><li>Growth momentum in international markets, especially in China helped mask the weakness in the US.</li></ul>

Lululemon was facing some really thorny questions from Mr. Market ever since 4Q’23 earnings. Today’s earnings should help calm some nerves.Here are my highlights from tonight’s call. Sales Growth by Region At first glance, one may find confirmation to plenty of concerns for LULU. US sales, which was ~61% of overall sales this quarter, grew by only 2%.Growth momentum in international markets, especially in China helped mask the weakness in the US.

Independent Research, US Dominant Players, Investment Talk

Investment Talk

Independent Research, US Dominant Players

Investment Talk is for readers who wish to learn about companies that are potentially outside of their own circle of research, as well as those who are longing to become part of a community of like-minded investors and learn more about investment research. I would describe myself as a long-term investor who typically takes a 3Y to 5Y outlook, before reassessing once that period matures. I follow the adage that one should research, reach a conclusion, and then verify and continue to hold so long as the thesis remains intact. My own investing style is one that seeks to find dominant players within their respective market who have shown signs of monopoly or oligopolistic behaviour, unlikely to be disrupted, in tandem with discovering market disruptors who have a high likelihood of disrupting their respective market. Equally (and weighted accordingly) I seek to discover more nuanced, misunderstood, situations with a shorter time frame.

<ul><li>On March 21st, Lululemon reported FY23 results. All things considered, the results were good. Guidance, however, caused some upset. Lululemon shares are down ~29% this year; after being down just 6% before the report, and is currently the 8th worst-performing stock in the S&amp;P 500.</li><li>Lululemon’s implied 11.5% revenue growth for 2024 is a notable deceleration from years prior; having averaged an annual revenue growth rate of 24.4% over the last 5 years.</li><li>This year’s revenue guidance is closer to, but still behind, the 5 years before that; where Lululemon averaged 15.7% annual revenue growth.</li></ul>

On March 21st, Lululemon reported FY23 results. All things considered, the results were good. Guidance, however, caused some upset. Lululemon shares are down ~29% this year; after being down just 6% before the report, and is currently the 8th worst-performing stock in the S&amp;P 500.Lululemon’s implied 11.5% revenue growth for 2024 is a notable deceleration from years prior; having averaged an annual revenue growth rate of 24.4% over the last 5 years.This year’s revenue guidance is closer to, but still behind, the 5 years before that; where Lululemon averaged 15.7% annual revenue growth.

Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

<ul><li>We are cutting our projections and price target for Express, but maintaining our Buy rating after the company missed 3Q projections and guided to a materially weaker than expected 4Q.</li><li>Further, with inventories heavier than expected ahead of the Holiday season (up 14% YoY, or flat if Bonobos is excluded) we expect the season to remain aggressively promotional and, in the near term, offset any gains from cost savings and other S,G&A reductions (and probably spill over into Q1FY24).</li><li>Our new price target of $20 (down from $40) translates to 8.2X our new, materially lowered FY24 EBITDA projection.</li></ul>

We are cutting our projections and price target for Express, but maintaining our Buy rating after the company missed 3Q projections and guided to a materially weaker than expected 4Q.Further, with inventories heavier than expected ahead of the Holiday season (up 14% YoY, or flat if Bonobos is excluded) we expect the season to remain aggressively promotional and, in the near term, offset any gains from cost savings and other S,G&A reductions (and probably spill over into Q1FY24).Our new price target of $20 (down from $40) translates to 8.2X our new, materially lowered FY24 EBITDA projection.

EXPR: 3Q Review; Cleaning Up the Mess; Reiterate Buy, Lowering PT to $20

<ul><li>We are reiterating our Buy rating, projections and price target for Express after visiting stores in Long Island and Connecticut.</li><li>We believe, after a tough Xmas last year, Express offerings are materially more versatile, priced better and more inline with the split between fashion and basics to create multiple exciting looks and outfits.</li><li>As such, we reiterate our Buy rating and price target for EXPR.</li></ul>

We are reiterating our Buy rating, projections and price target for Express after visiting stores in Long Island and Connecticut.We believe, after a tough Xmas last year, Express offerings are materially more versatile, priced better and more inline with the split between fashion and basics to create multiple exciting looks and outfits.As such, we reiterate our Buy rating and price target for EXPR.

EXPR: Snapping the Store: Remedying Issues of Xmas Past; Reiterate Buy, $40 PT

<ul><li>We are reiterating our Buy rating, $40 price target and projections for Express with the company announcing 3QFY23 (October) results before the open on Thursday.</li><li>With a new Chief Executive Officer and Head Merchant and the Chief Financial Officer recently resigning for another opportunity, the 3Q call will be the first pronouncements from new management.</li><li>As such, and with operating comparisons continuing to ease and the product mix (especially in women's) improving, we reiterate our Buy rating and pricetarget for EXPR.</li></ul>

We are reiterating our Buy rating, $40 price target and projections for Express with the company announcing 3QFY23 (October) results before the open on Thursday.With a new Chief Executive Officer and Head Merchant and the Chief Financial Officer recently resigning for another opportunity, the 3Q call will be the first pronouncements from new management.As such, and with operating comparisons continuing to ease and the product mix (especially in women's) improving, we reiterate our Buy rating and pricetarget for EXPR.

EXPR; 3Q Preview: New Management Set to Introduce Themselves; Reiterate Buy, PT

United States

lululemon athletica Inc. designs and retails athletic clothing.  The Company produces fitness pants, shorts, tops and jackets for yoga, dance, running, and general fitness. lululemon serves customers throughout the world.

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Lululemon Athletica (LULU US)

Lululemon 1Q'24 Update

Lululemon was facing some really thorny questions from Mr. Market ever since 4Q’23 earnings. Today’s earnings should help calm some nerves.

MBI Deep Dives

Why Lululemon Isn’t Under Armour

Lululemon’s implied 11.5% revenue growth for 2024 is a notable deceleration from years prior; having averaged an annual revenue growth rate of...

Investment Talk

EXPR: 3Q Review; Cleaning Up the Mess; Reiterate Buy, Lowering PT to $20

We are cutting our projections and price target for Express, but maintaining our Buy rating after the company missed 3Q projections and guided to...

Small Cap Consumer Research

EXPR: Snapping the Store: Remedying Issues of Xmas Past; Reiterate Buy, $40 PT

We are reiterating our Buy rating, projections and price target for Express after visiting stores in Long Island and Connecticut. We believe,...

Small Cap Consumer Research

EXPR; 3Q Preview: New Management Set to Introduce Themselves; Reiterate Buy, PT

We are reiterating our Buy rating, $40 price target and projections for Express with the company announcing 3QFY23 (October) results before the...

Small Cap Consumer Research

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