• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Jim Cramer

Jim Cramer: Lululemon Is a Master at Experiential Retail

LULU rocked its recent earnings report and is killing it, generally -- and here is why.
By JIM CRAMER sep 06, 2019 | 07:33 fm EDT
Stocks quotes in this article: LULU, BURL, HD, WMT, AMZN, TGT, COST, DLTR, RH, UA, M, KSS

Let's add a third kind of retailer to the list of successes: the experiential retailer. After listening to Lululemon's (LULU) execs talk about a truly blow-out quarter, I have to take back what I said about only WATCH and the price-breakers -- you know the dollar stores and Burlington Stores (BURL) -- being successful.

If you are ingenious, or you "engineer growth" as they said on the call, you can get the job done.

My initial thesis, that you are either online or off-price still holds. The power of Walmart (WMT) , Amazon (AMZN) , Target (TGT) , Costco (COST) and Home Depot (HD) is insane. They have been able to hold the line on price and cram the suppliers, many of whom are still sourcing from China. Target's note to suppliers about how they have to eat the tariffs tells you the power of WATCH.

We saw astounding numbers from the dollar stores and knock offs. Dollar Tree (DLTR) talked about how it has mitigated the tariffs through sourcing and clever tricks like learning how to pack a container with more merchandise. I think that companies that source from China have been way too lazy about switching. Burlington's crushing it because the mall isn't. That quarter last week was stupendous because the department stores were awful.

But Lululemon is a horse of a different color. It is integrating itself into the fabric of society, no pun intended, with innovation like their new store in Lincoln Park, Illinois where CEO Calvin McDonald talks about "connectivity with our community both inside and outside the four walls of our store." I think that's the key to building traffic these days and only RH (RH) , the old Restoration Hardware, which reports next week, rivals this company.

Lincoln Park has dedicated space to " sweat, grow and connect all under one roof," the company says, and the template is so good they are already taking it to the Mall of America, the largest mall in the country. Meditation rooms, locker rooms, showers, health food -- it's got it all and that's a very strong category to tie yourself to. Their new deal with Barry's Boot Camp solidifies their ownership of the real deal workouts.

It's global: They have powerful "Annual Sweat Life Festivals" in London and Berlin that bring people into the stores. They back marathons, which McDonald says are "fantastic examples of how we are bringing innovation to guest engagement." Their relentless focus on what they call the "science of feel" and their desire to solve "sweaty problems for athletes" reminds me of the old innovative ways of Under Armour (UA) .

They know online -- always have. They are now offering buy online and pick up.

Finally, they are a China winner, calling out "particular strength," with 70% e-commerce growth and a plan to add 15 stores this year. But, unlike many other apparel-related entities, they were quick to diversify away from China, with just 6% exposure now for the U.S. stores, which is down a lot because of adept sourcing.

Look, I know there are some attractive brick and mortar retailers. Macy's (M) with a near-10% dividend that's safe, looks compelling. I like Kohl's (KSS) because of its tie-in with Amazon -- you can return goods bought on Amazon right to their stores.

But if you want growth, you need experiential, I mean real experiential, not faux, all-talk experiential. Lulu's got it. It's got the best there is and that's how you put up high-teen same-store sales, that's how you get a stock that's up 61% this year, and yet it remains a buy.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AMZN, KSS, BURL and HD.

TAGS: Earnings | Fundamental Analysis | Investing | Stocks | Retail | Jim Cramer | Consumer Products | U.S. Equity |

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login