After Snafu, Lululemon Beating the Pants Off S&P 500

After Snafu, Lululemon Beating the Pants Off S&P 500

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They’re baaaaaack…. That is to say, yoga enthusiasts who had been mourning the absence of their favorite Astro and Groove yoga pants at Lululemon Athletica (NASDAQ: LULU) stores can rejoice, and open their wallets to replenish their wardrobes. Transparency is good when it comes to financial statements; less compelling when it involves unexpectedly sheer black yoga pants, it seems, and the high-profile Vancouver-based company had to yank the two models from shelves in March. The snafu cost Chief Product Officer Sheree Waterson her job in April, but in spite of the fact the company expects to take a financial hit from the mishap, investors can’t seem to fall out of love with the stock. Barclays slapped an “overweight” recommendation on it; it’s trading at more than 40 times trailing earnings, and the share price is up more than 17 percent since the pants were pulled from stores, more than four times the gain reported by the S&P 500. Make a decent product, build a big brand name and not only the consumers but the investors will remain faithful, come hell, high water and excess sheerness.

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Business journalist Suzanne McGee spent more than 13 years at The Wall Street Journal before turning to freelance writing. Author of the book Chasing Goldman Sachs, she has written for Barron’s, The Financial Times, and Institutional Investor.