Lululemon vs. Nike

CASE STUDY COMPANY RESOURCES

Lululemon (LULU)

NOTES & QUESTIONS

Lululemon Stock Chart

If you would like to use a current stock chart for your project:

• Search “Lululemon stock chart” in Google (You can use Google Finance as well).

• Click on the Yahoo! Finance link to Lululemon’s stock chart.

• This will show up at the top of the frst page on Google.

• Once you arrive at the stock chart you can manipulate how many years, months, or days you would like it to show.

Lululemon Balance Sheet

If you would like to use a current balance sheet for your project:

• Go to Yahoo! Finance (You don’t have to sign-in or sign-up). • Search “Lululemon,” then click the “Financials” tab, and then “balance sheet.”

• You can “expand all” to see the information that goes into each section and you can change it from annual to quarterly.

ARTICLE

Lululemon Athletica Inc.’s Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock? June 13, 2022

Lululemon Athletica (NASDAQ:LULU) has had a rough month with its share price down 5.7%. However, a closer look at its sound fnancials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at. Particularly, we will be paying attention to Lululemon Athletica’s ROE today.

ROE or return on equity is a useful tool to assess how efectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the proftability of a company in relation to its equity capital.

How To Calculate Return On Equity?

The formula for return on equity is: Return on Equity = Net Proft (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Lululemon Athletica is: 38% = US $1.0b ÷ US $2.7b (Based on the trailing twelve months to May 2022).

The ‘return’ is the amount earned after tax over the last twelve months. So, this means that for every $1 of its shareholder’s investments, the company generates a proft of $0.38.

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efciently a company is generating its profts. We now need to evaluate how much proft the company reinvests or “retains” for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, frms with a high return on equity and proft retention, have a higher growth rate than frms that don’t share these attributes.

A Side By Side comparison of Lululemon Athletica’s Earnings Growth And 38% ROE First thing frst, we like that Lululemon Athletica has an impressive ROE. Additionally, the company’s ROE is higher compared to the industry average of 21% which is quite remarkable. So, the substantial 25% net income growth seen by Lululemon Athletica over the past fve years isn’t overly surprising.

As a next step, we compared Lululemon Athletica’s net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 4.3%.

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you’re wondering about Lululemon Athletica’s’s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Lululemon Athletica Using Its Retained Earnings Efectively?

Given that Lululemon Athletica doesn’t pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profts to grow its business.

Summary

In total, we are pretty happy with Lululemon Athletica’s performance. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. Unsurprisingly, this has led to an impressive earnings growth. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.

ARTICLE Lululemon Invests in Sustainable Materials Company Genomatica

By Chavie Lieber | August 18, 2021

The ftness apparel giant announced Wednesday it will be using the company’s bio-based materials for future products. Genomatica makes plant-based nylon, which Lululuemon said will replace some conventional nylon it uses for it workout apparel.

As part of the partnership, Lululemon has also made its frst equity investment in Genomatica, although it would not disclose the amount. Lululemon funding Genomatica is a nod at its sustainability goals. In October 2020, the company released its Impact Agenda, where it shared plans to become a more sustainable company. The company is working with Mylo, which develops mushroom-based leather, as well as LanzaTech, a company that makes polyester from recycled carbon emissions.

“Replacing the petrochemicals that make up many popular materials with more sustainable alternatives is a major step forward,” Patty Stapp, vice president of raw materials at Lululemon said in a statement.

ARTICLE

Did Lululemon Make a $500 Million Mistake?

By Neil Patel | March 25, 2022

The apparel company’s purchase of Mirror isn’t going so well.

Lululemon’s $500 million acquisition in June 2020 of at-home ftness company Mirror hasn’t panned out as management had hoped. And investors are starting to worry whether this was a huge waste of money.

On the fscal 2021 third-quarter conference call, the booming apparel business lowered Mirror’s full-year revenue guidance to between $125 million and $130 million (from $250 million to $275 million before). Although this is a rounding error for Lululemon’s overall business, which is expected to generate greater than $2.1 billion in sales in the current quarter, it nonetheless begs an important question.

Was the Mirror purchase a mistake?

Lululemon’s management team cited weaker-than-expected demand and higher customer acquisition costs as reasons to lower guidance for the Mirror segment. This echoes what Peloton (NASDAQ: PTON), regarded as the leader in the connected-ftness market, has been experiencing for the past few quarters. Not only is the once-booming exercise bike manufacturer seeing revenue dramatically slow down, but its sales and marketing expenses also surged 97% in the most recent fscal quarter compared to the prior-year period.

Luckily for Lululemon, Mirror’s fnancial results will only dilute earnings by 3% to 5% for the full fscal year of 2021. Meghan Frank, Lululemon’s CFO, shared optimism on the last earnings call: “So in terms of Mirror in 2022 ... the path to proftability is very much within our control.” Management also expects Mirror to boost its subscriber base by 40% year over year. That’s a positive sign.

As of Oct. 31, Mirror shop-in-shops were in place at 152 U.S. Lululemon stores and 48 locations in Canada. The goal is to fnd ways to cross-sell Mirror products, which start at $1,495, to Lululemon’s more than 10 million guests. I’m sure there is a signifcant overlap between the addressable demographics.

“We want everybody sweating on a Mirror to be in Lululemon and we want everybody sweating with Lululemon to be engaging and using a Mirror,” Lululemon CEO Calvin McDonald highlighted. So far, this looks like a pipe dream.

Focus on apparel

There is a bright side for Lululemon investors to think about -- Mirror is only expected to represent less than 3% of overall company revenue in fscal 2021.

Lululemon’s business has been performing incredibly well, thanks to its Power of Three strategy that emphasizes a focus on an omnichannel experience, product innovation, and geographic expansion. Getting into the footwear business is another sign of how the company is pushing forward with new growth initiatives.

Having a thriving apparel operation afords Lululemon’s management team the ability to not have to invest aggressively in Mirror to try and force success. They can continue to fgure out ways to integrate Mirror into the bigger business and take a more calculated approach. Generating $1.4 billion in operating cash fow over the trailing 12 months provides plenty of fnancial fexibility to plow into boosting Mirror.

Nonetheless, investors are probably scratching their heads at the $500 million price tag Lululemon paid for the at-home ftness company. This was in June 2020, at a time when so-call COVID stocks were the darlings on Wall Street, and competitor Peloton’s market value was skyrocketing. Time will tell whether Mirror works out as leadership had envisioned. For now, Lululemon shareholders will have a thriving apparel business to keep their portfolios in tip-top shape.

ARTICLE

Why Lululemon Isn’t Worried About This Red Flag

by Demitri Kalogeropoulos | June 9, 2022 Inventory levels soared this past quarter.

Lululemon Athletica has a lot of inventory on hand, which normally would be a red fag for any retailing business. That risk is even more elevated at a time when economic growth rates are slowing and infation is spiking.

However, the apparel retailer isn’t as exposed to inventory write downs as you might think. Strong demand trends through the frst part of 2022 also imply

Lululemon is striking the right balance in keeping its shelves fully stocked.

Let’s take a closer look.

Good growth

The main reason not to worry about stockpiling inventory is that growth trends have rarely been better. Lululemon notched a 32% spike in sales through the selling period that ended on May 1, trouncing expectations for the second straight quarter. For context, Nike reported 9% revenue growth in its core U.S. market through late February.

Lululemon’s business is riding several positive trends, including a food of hit product releases and its push into new demographics and geographies. Its athletic and leisure apparel is striking a chord with online shoppers, too, which accounted for nearly half of overall sales.

In that context, it makes sense that inventory would rise 74% year over year to $1.28 billion in the fscal frst quarter. Management is rebuilding inventory (compared to a slump last year) while working to secure more products, so it doesn’t have to rely as much on expensive air freight transportation.

The Lululemon diference

It’s also notable Lululemon doesn’t carry as many seasonal items as other retailers like Target and TJ Maxx. That setup means investors can worry less about the promotions and writedown charges that hurt Target’s 2022 earnings outlook. “Our primary focus on technical athletic apparel mitigates the need for mark downs,” CEO Calvin McDonald said in a recent conference call with investors.

That success allowed Lululemon to maintain its industry-thumping proftability level. Operating margin held steady in the latest quarter and is sitting well above peers like Nike. Sure, Nike is more exposed to the Chinese market, which slumped recently due to pandemic restrictions, but Lululemon has a brighter earnings outlook overall, partly because of its success in the e-commerce channel.

Looking ahead

Management said in early June they weren’t concerned with the inventory buildup, which they described as a planned process. “While our levels are higher than our historical norms,” McDonald said, “we are comfortable with the quality and composition of our inventory.”

Investors will have to wait and see if management’s inventory bet pays of with the frst evidence arriving with the retailer’s next earnings results in early September.

Striking the right balance would likely mean Lululemon outpaces the growing athleisure industry in both sales and proftability. The wrong call by the management team would show up most clearly in falling gross and operating margins through the summer months.

CASE STUDY COMPANY RESOURCES

Nike (NKE)

NOTES & QUESTIONS

Nike Stock Chart

Nike Stock Chart

If you would like to use a current stock chart for your project:

• Search “Nike stock chart” in Google.

• Click on the Yahoo! Finance link to Nike’s stock chart.

• This will show up at the top of the frst page on Google.

• Once you arrive at the stock chart you can manipulate how many years, months or days you would like it to show.

Nike Balance Sheet

If you would like to use a current balance sheet for your project:

• Go to Yahoo! Finance (You don’t have to sign-in or sign-up).

• Search “Nike”, then click the “fnancials” tab, and then “balance sheet.”

• You can “expand all” to see the information that goes into each section and you can change

it from annual to quarterly.

ARTICLE

Nike Corporate Social Responsibility (CSR) and Sustainability

Marissa Dean, Ph.D.

Founded in 1964, Nike is the largest and most recognized sports apparel brand in the world today. From their humble beginnings as a shoe and t-shirt company, Nike has grown into an international conglomerate with an estimated global brand value of $30 billion in 2021. Headquartered near Beaverton, Oregon, the company operates more than 1,000 retail stores worldwide and employs over 73,000 people in 170 countries.

In line with their iconic swoosh and “Just Do It” trademark, Nike’s business model is built on developing game-changing technologies and products that have redefned the sports apparel industry. Much of the company’s success is attributed to its international marketing, which includes partnering with popular celebrity athletes and sports teams from around the globe.

Nike’s Corporate Social Responsibility (CSR) Policy

Nike’s Corporate Social Responsibility and Sustainability program resonates with the company’s core belief that “sports can change the world for the better.” Nike leverages the unifying power of sports to promote its CSR agenda in three key areas: diversity and inclusion, community investment, and environmental sustainability.

I. Nike’s Diversity and Inclusion Program

Nike’s CSR and corporate governance programs center on providing a healthy and tolerant work environment for all employees. To that end, the company invests in promoting a work environment that celebrates diversity and inclusion. In 2020, Nike introduced two new CSR programs, their Juneteenth learning initiative, and their Unconscious Bias Awareness training program to promote a greater understanding of racial equality and social change. Throughout 2020-21, Nike laid out a fve-year plan for creating more diversity in their workforce, which included a target goal of 50% representation of women and 35% representation of racial and ethnic minorities in their corporate workforce by 2025. In conjunction with this initiative, Nike announced an investment of $125 million over the next fve years to support businesses committed to “leveling the playing feld.”

In 2020, Nike allocated $4 million to support diversity and inclusion in communities throughout North America through its Until We All Win program. Additionally, eight of Nike’s Employee Networks donated $25,000 a year to nonproft organizations focusing on promoting social equality, regardless of race, gender, and sexual orientation.

II. Nike’s Community Support Program

As part of their community outreach program, Nike spent more than $89 million in 2020 to help over 17 million kids around the world get active in sports and exercise. Nike also committed to training nearly 100,000 coaches to help communities most in need.

To encourage more gender inclusivity and equality, Nike invested over $100 million into their Girl Efect program between 2015-2020 to improve the lives of tens of millions of girls in 20 countries throughout Africa and Asia.[5] The company also expanded its digital training tools to include the Coaching Girls program which aims to make sports more fun and inclusive for girls through coach education and leadership training.

Lastly, in collaboration with Converse, Jordan Brand, and Michael Jordan, Nike announced a 10-year $140 million CSR commitment to support social equality for Black Americans, $40 million of which is intended to support organizations and nonprofts addressing systemic inequality.

COVID-19 Response Nike’s COVID-19 response was widespread, covering the costs of food and apparel for global communities and extra assistance for their employees. The eforts included $30 million for food and medical care and a $5.7 million dollar donation of footwear and apparel to healthcare professionals and front-line workers.

For employees, Nike worked with suppliers to implement proper health and safety protocols at their facilities and provided paid time of and free virtual counseling for those who were experiencing mental and emotional distress due to the pandemic. Nike also implemented a two-to-one match for all employee donations made to organizations addressing COVID-19-related relief and support.

III. Nike’s Sustainability Program

Understanding that if there “is no planet, there is no sport” Nike continues to make considerable inroads in promoting their environmental sustainability initiatives.

Through the Supplier Climate Action Program, Nike ensures their suppliers and manufacturers are committed to their goal of carbon neutrality by 2025. So far, the company announced that all of their North American facilities, as well as 48% of their global operations, are operating on 100% renewable energy, and 99.9% of manufacturing waste from their tier 1 suppliers have been diverted from landflls. Under this new program, there was also a 30% reduction of fresh water used in manufacturing textiles and materials in 2020.

To further reduce waste, Nike is introducing more sustainable materials into their product lines and taking advantage of reusable and recyclable products. In 2020, sustainable material integration increased from 41% to 59% in their clothing lines. Although [EE1] [MH2] the use of sustainable materials in their footwear was unchanged in 2020, the company is focusing on sustainable materials such as Flyleather, a material made with at least 50% recycled leather scraps. So far, over 4 billion plastic bottles have been reprocessed into polyester and other textiles that are used in their products. Nike is also piloting alternative packaging solutions that replace corrugated cardboard with reusable shipping totes.

Nike’s Corporate Social Responsibility Issues

Despite adopting a range of new environmental protocols to reduce environmental waste, Nike’s carbon footprint remains unchanged from its 2015 baseline. This is largely attributed to a steady stream of new footwear lines that require new materials. In addition, while the brand has set a science-based target to reduce greenhouse gas emissions, there is little evidence they are on track to meet their target of operating entirely on renewable energy by 2025. There is also no clear indication that the company - which relies heavily on trees and plants for their textiles - has a policy in place to address deforestation.

In addition to concerns surrounding their environmental impact, Nike’s labor practices continue to be scrutinized for human rights violations. In 2020, The Washington Post reported that members of the Uighur Muslim minority in China working for Nike were subjected to coerced working conditions and ethno-religious discrimination. In response to this criticism, Nike issued a statement saying that while they are “concerned about reports of forced labor, Nike does not source products from the XUAR [Xinjiang Uyghur Autonomous Region].”

Nike has also been under fre recently for fnancially penalizing female athletes who become pregnant while under contract. To address the controversy, Nike has since amended its policy, stated that it will no longer pause or stop payment to pregnant athletes. Despite these eforts, the company continues to be criticized for not acknowledging its past treatment of female athletes.

Conclusion

Living up to their “Just Do It” brand, Nike continues to set industry standards for its innovative product designs and marketing strategies. To maintain its competitive advantage, Nike will need to expand and improve their supply chain practices to ensure that protocols protecting the safety and wellbeing of all workers are enforced. The company’s heavy reliance on overseas factories also means that Nike will need to continuously monitor and improve their operations to ensure that its products are socially and ecologically sustainable.

ARTICLE

Bad News for Nike Makes Lululemon the Better Buy

Neil Patel The Motley Fool | September 28, 2021

Nike (NYSE: NKE) has long been the undisputed leader in the global athletic apparel market, but its recent quarterly results show a business battling shipping delays, labor shortages, and production shutdowns. Sales of $12.45 billion in the most recent quarter missed Wall Street expectations, and the stock price tanked roughly 6% following the news.

Then there’s the fast-growing stock market favorite Lululemon Athletica (NASDAQ: LULU), whose top- and bottom-line beats and higher full-year guidance have pushed its stock 14% higher since reporting on Sept. 8. While dealing with the same issues as Nike, Lululemon has a distinct advantage that lets it handle the negative situation better.

You’ve defnitely heard this one before

Nike’s frst quarter of fscal 2022 was a poor performance all around. Revenue in North America, the company’s largest geographic segment, also disappointed Wall Street. And Greater China, which is usually its fastest-growing region, registered the slowest gains out of any of Nike’s geographies.

To make matters worse, management lowered guidance for the full fscal year. “We now expect fscal ‘22 revenue to grow mid-single digits versus the prior year, versus our prior guidance of low double-digit growth,” CFO Matt Friend mentioned during the Q1 earnings call.

Because 51% of Nike’s footwear and 30% of its apparel is made in Vietnam, COVID-19-related shutdowns in the country are having an extremely adverse efect on the company. Management admits that 10 weeks of production has already been lost in the Southeast Asian nation, and it will take several months of phased reopenings to get things back up to speed. Moving fnished goods from Asia to the U.S. is a diferent animal altogether, something Friend says now takes 80 days on average, double the time it took before the pandemic.

Shareholders will be happy to know that Nike is by no means dealing with a demand problem, as consumer interest in the brand remains as strong as ever. Inventory levels, however, are not expected to normalize until fscal 2023, so how the company navigates the upcoming holiday shopping season will be important for shareholders to watch.

Having less inventory on hand has had one positive impact on Nike. Since the business didn’t have to resort to as many price markdowns and other promotions, its gross margin for the quarter came in at 46.5%. But as you’ll see, this doesn’t hold a candle to Lululemon.

Not a concern for the athleisure pioneer

Lululemon is the darling on Wall Street, as its stock has soared nearly sevenfold over the past fve years, crushing bigger rival Nike. Revenue for fscal 2021 is forecast to be $6.23 billion (at the midpoint), compared to previous guidance of $5.87 billion (at the midpoint). Lululemon is now on track to achieve its 2023 revenue target an incredible two years ahead of schedule. For what it’s worth, earnings expectations also received a boost.

Operating in the same industry, you’d think Lululemon would be in the same boat as Nike, and that is defnitely the case. But the athleisure clothing maker’s unwavering focus on going direct-to-consumer gives it a leg up on the competition.

Relying primarily on its own website and global footprint of 534 stores to distribute its insanely popular items, you rarely, if ever, see Lululemon products go on sale at huge discounts. And that’s why the business produced a gross margin of 58.1% in the most recent quarter. CEO Calvin McDonald revealed why this proftability is so important, especially in a supply-constrained economy like the one we’re currently in. “Our vertically integrated model and high margin structure allows us to use more airfreight while still delivering gross margin expansion.”

There you have it. Lululemon’s premium pricing allows it to more easily deal with the current situation, while still satisfying Wall Street’s demands. And like Nike, it has no issues when it comes to consumer demand. Lululemon is strengthening its competitive position as its larger peer is struggling to keep up. And that’s why I think it’s the best apparel stock to own today.

ARTICLE

Nike rises to its highest spot ever on new Fortune 500 list

By Demi Lawrence – Staf Reporter, Portland Business Journal | May 23, 2022

Oregon’s homegrown footwear and apparel giant inched up two spots from last year in the latest ranking of the nation’s largest corporations.

Nike (NYSE: NKE) ranked No. 83 in this year’s Fortune 500 — its highest place to date — after a year in which profts increased more than 125% to $5.7 billion and revenues rose 19% to $44.5 billion.

Nike frst made the Fortune 500 in 1995, debuting at No. 301 and has been mostly rising in rankings since, breaking into the top 100 in 2016.

Expected to announce quarterly earnings next month, Nike’s recent business has some analysts anticipating headwinds. According to senior adviser for sports at market research

company NPD Group Matt Powell last month, Nike brand sales including direct-to-consumer sales are down 16% versus this time last year.

This is a blow to the company that last year announced its Consumer Direct Acceleration, a business strategy which replaces the Consumer Direct Ofense and puts even greater emphasis on getting products to market quickly and through direct sales channels, such as Nike’s apps and stores.

Medford-based auto group Lithia Motors (NYSE: LAD) also rose on this year’s list, climbing 73 spots to No. 158.

While the Fortune 500 gets the most attention, the business magazine compiles a list of the 1,000 largest companies. That brings in three more companies with Oregon headquarters: Columbia Sportswear at No. 813 (up 28 spots); Schnitzer Steel Industries at No. 890 (unchanged); and Portland General Electric at No. 942 (down 16 spots).

ARTICLE

Nike Stock vs. Lululemon Stock: Which is the Better Sports Apparel Buy? Lululemon is the Fastest-Growing Sports Apparel Company. Is it a Better Buy than Nike Stock? Let’s Break down Nike stock vs. Lululemon stock.

By Chris Preston | July 1, 2022

Nike (NKE) has been king of the sports apparel market for decades, swatting away challengers as easily as Dikembe Mutombo might redirect a Muggsy Bogues layup attempt. Under Armour (UA) has failed to overtake them. Adidas (ADDDY) has faded a bit. You don’t even hear about Reebok anymore. Nike is still the king. Lululemon (LULU), a far more niche apparel company, may be its closest challenger. So, with spring around the corner, it’s time to get your athletic apparel out of winter storage. I thought it might be worthwhile to compare Nike stock vs. Lululemon stock.

In terms of size, there’s no comparison. Nike is a $198 billion market cap company and Lululemon is a $46 billion market cap company.

And yet, on an average day, you might see as many people (men and women) wearing Lululemon yoga pants and pullovers as you see people wearing Nike gear. Ten years ago, that wasn’t the case.

The numbers support the anecdotal evidence. In 2010, Lululemon did just $411 million in sales. In 2020, net revenue increased 11% to $4.4 billion, exceeding analysts’ expectations

of the company to pull in $4.14 billion in revenues, even with the nationwide shuttering of non-essential retail stores putting a dent in those estimates. Earnings did take a hit last year, but are expected to bounce back in a big way this year: analysts anticipate 63% EPS growth. Nike’s sales and earnings growth have taken more of a hit the last couple years. But in fscal 2021 EPS ($3.56) more than doubled the prior year’s results ($1.60). Granted, any year-over-year comparisons to 2020 are tricky. But for the most part, Nike is still growing. And the general disparity in sales growth in NKE vs. LULU is no surprise given that Nike is the much older company, and perhaps the most universally recognized sports brand on the planet.

Even if it eventually expands beyond its yoga roots, Lululemon may never catch Nike in terms of sales, global reach, or popularity across all demographics (Lululemon’s customers tend to be white and higher income, whereas Nike gear is worn by all). That said, which apparel company is the better investment right now: Nike stock vs. Lululemon stock.

Let’s break it down!

Nike Stock vs. Lululemon Stock

From a value investing perspective, NKE is the more appealing stock, trading at 28.3 times forward earnings vs. a forward P/E of 41.7 for LULU; the margin isn’t as wide as you might expect given their relative ages (LULU held its IPO in 2007, NKE in 1980). In the long term, Lululemon is growing faster than Nike. What’s telling is that institutional ownership in the two stocks hasn’t wavered; each apparel stock remains above 80% owned by hedge funds, which means Wall Street still thinks highly of both.

Going back further, LULU is up 69% in the last two years, while NKE is up 42.5%. Over the last fve years, LULU has outpaced NKE by about 5 to 1.

Will that continue over the next fve years? Probably not to that degree, especially since it will take a while for all retailers to recover from the damage COVID-19 did to non-essential businesses. But with analysts expecting Lululemon to resume double-digit top- and bottom-line growth this year, I expect LULU will continue to outperform both the market and NKE in the next half-decade. Sure, the valuation is a bit high, but not that high given the growth trajectory.

As for Nike stock, it remains a rock-solid, long-term investment, and likely a safer short-term play if market volatility continues. If you add NKE to your portfolio and stash it away for 10 years, you’ll probably do quite well (it pays a modest 0.97% dividend yield too, which helps over the long haul). But LULU is the better growth stock.

Lululemon may never knock Nike from its sports apparel perch, no matter how many people you see wearing yoga pants to the local cofee shop. But in terms of Nike stock vs. Lululemon stock, it’s no contest. Buy LULU.