Tweet

Mostly Borrowed Ideas

9 Sep, 13 tweets, 4 min read

1/ Thread: $LULU 2Q'22 Update

"I am pleased to share that we will surpass our 2023 revenue target by the end of this year, 2 years ahead of schedule." 👀

2Q'22 topline $1.5 Bn (guidance $1.3-1.33 Bn) which is 28% 2-yr CAGR. No wonder the stock was +14% AH.

Here are my notes.

2/ Company operated stores

+142% YoY, but misleading due to store closure last yr. 2-yr CAGR +9% vs flat expectation

Store productivity now at par with 2019 level.

~95% stores open now (most store closure in Australia and NZ)

28 net new store open in LTM

3/ DTC/E-com

+4% YoY which is pretty impressive given last yr's +157% YoY growth

2-yr CAGR +66% vs expectation +55%

4/ Overall revenue 2-yr CAGR in North America and international markets +26%, and +43% respectively.

2-yr CAGR on women and segment +26% and 31% respectively

5/ Hard to imagine things could have been even better looking at those numbers, but this is what the CEO said:

"I think it's fair to say that our business would have been even stronger without these challenges facing the industry."

Challenges = supply chain issues

6/ Mirror is now in 150 stores and plan is to make it available in 200 stores by holiday season.

Interesting update on LULU membership program: they are suspending it following the pilot in the last couple of years in some region.

But it's not cancelled forever...

7/ It appears LULU will launch another membership program that will incorporate Mirror into the program.

I was initially skeptical about the loyalty program. Not much details provided about this potential Mirror+Lulu, so obviously no opinion.

8/ LULU is increasing minimum pay from $15/hr to $17/hr.

Also called out rising CPM in digital marketing. $FB

9/ Despite the headwinds, Gross margin: 2Q'22 +58.1% vs 2Q'20 +54.2% vs 2Q'19 55.0%

~180 bps of SG&A leverage as well this quarter

Inventory grew +17% vs expectation +25-30%

10/ Outlook

$LULU raised full yr FY'22 guidance to $6.19-6.26 Bn from $5.8-5.9 Bn

I was looking at my model that I provided in my deep dive published in Nov'20. I modeled $6.0 Bn next year (FY'23) 🤡

11/ Thankfully, I changed my mind soon enough once I observed the underlying momentum after Q1. This quarter was just firing on all cylinders and as per guidance, that will continue.

I explained after Q1 why I changed my mind and bought LULU:
mbi-deepdives.com/lulu2/

12/ One of the underappreciated factors is how the $LULU brand wasn't managed well for 10 yrs and yet it did okay due to the brand's cult status, but may be the true potential of the LULU brand was never quite realized.

The era of Calvin McDonald is making me think on that q.

End/ All my twitter threads are here: mbi-deepdives.com/twitter-thread…

Subscribe for one deep dive every month (will publish $SQ on 15th this month): mbi-deepdives.com/plans/subscrib…

• • •

Missing some Tweet in this thread? You can try to force a refresh

This Thread may be Removed Anytime!

Twitter may remove this content at anytime! Save it as PDF for later use!

More from @borrowed_ideas

Mostly Borrowed Ideas

@borrowed_ideas

10 Sep

1/ Thread: Investing only in bull markets

I started investing in 2013. Not in the US, but in Bangladesh.

Bangladesh market reached a stratospheric level in 2010 which is yet to be crossed after 11 years. The index is still ~20% below 2010 peak.

2/ I was a Senior in college in 2013 and decided to major in Finance. I thought I should get into investing.

When I started, the market experienced ~60% drawdown. Even though I had no clue what I was doing, it was hard to go wrong when you invest in such a market.

3/ After graduation, I got a job in research which definitely helped me understand investing a bit better.

Bangladesh market is almost entirely driven by retail investors as institutional investor base is pretty weak. In fact, most institutional investors behave like retail.

Read 13 tweets

Mostly Borrowed Ideas

@borrowed_ideas

26 Aug

1/ $ADSK FY 2Q'22 Update

Another decent quarter, but FCF guidance for full year is slightly softer than earlier which perhaps led the stock to ~7% decline in AH. But after listening to the call, any potential concern related to FCF should evaporate.

Here are my notes.

2/ Revenue met high end of the guidance for the quarter. Low end of the topline guidance for the full year was increased, and so did margins.

But as mentioned earlier, FCF mid-point guidance for FY decreased from $1.61 Bn to $1.54 Bn.

3/ Why did FCF guidance fall?

ADSK used to have multi-year Enterprise Business Agreement (EBA) for which they would get paid cash upfront, but in exchange EBAs would receive ~10% discount.

ADSK is still doing multi-year EBAs, but switching to annual billings, so less cash...

Read 12 tweets

Mostly Borrowed Ideas

@borrowed_ideas

21 Aug

1/ Rate of change in technology

“It isn’t that I don’t understand software products, but I don’t know how that industry is going to develop over 10 or 20 years… so anything that’s rapidly developing that has lots of change embodied in it, by my definition, I won’t understand.”

2/ Two companies that I recently studied ( $CRWD and $ROKU) reminded me of that Buffett quote.

Both are run by founders, have executed incredibly well over last few years and enjoyed secular tailwinds on their back. They were nimble, aggressive, and eating incumbents’ share.

3/ Both companies are valued in a way that assumes they will coast through the next 5-10 years.

But when you look at the rate of change in their respective industries, it makes you think whether such assumptions will indeed hold.

Read 14 tweets

Mostly Borrowed Ideas

@borrowed_ideas

20 Aug

1/ Thread: Etsy’s international opportunity

One of my core thesis for $Etsy is their ability to scale the brand in international markets. Building two-sided marketplace is not easy, but to do it in multiple countries is even more difficult.

But Etsy might just pull it off.

2/ In 2Q’20, international was 32% of total GMS. In 2Q’21, it reached 41%.

Important to remember how Etsy defines international. If either buyer or seller is outside the US, it is considered international.

3/ When both buyer and seller is in the same country outside the US, that’s considered “domestic international”.

In 1Q’21, Etsy mentioned “International domestic” GMS grew 2x faster than overall revenue.

Read 13 tweets

Mostly Borrowed Ideas

@borrowed_ideas

16 Aug

1/ Some thoughts on Google Search

I was listening to ILtB's episode with Sridhar who played instrumental role in Google's Search success, and is now building Neeva, a subscription based private search product.

As a $GOOG shareholder, I was curious and here's my notes.

2/ In 1Q'21 earnings call, Philipp Schindler explained drivers of search:

I. Number of queries
II. Percentage of queries that have commercial potential
III. Click-through rates
IV. Cost Per Click (CPC)

Sridhar condensed it further: volume of clicks multiplied by CPC

3/ "It turns out that persuading people to query more is next to impossible. All of us have a certain propensity to use search, and it varies from person to person."

Read 11 tweets

Mostly Borrowed Ideas

@borrowed_ideas

14 Aug

1/ Thread: The Case for Optimism

I started my weekend with this deeply intriguing piece by Kevin Kelly.

I would like to leave my notes here because I know I want to remember and often remind myself many of the following quotes.

2/ "It is extremely difficult to create a desirable future without first envisioning it. To imagine is really the first step in creating anything."

3/ "Since we can not be certain of the future, optimism is only a belief -- a stance that could be incorrect."

"In the long run, optimists shape the future."

Read 14 tweets

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!