Bjorn Borg AB (STO: BORG) will be expanding into the U.S., U.K., and Germany, as the company looks to become a global brand. Once known for their brightly colored underwear, BORG has spent the last 3 years transforming itself into a sportswear brand that intends to compete with the likes of Lululemon (LULU), Nike (NKE), Adidas (ADDYY) and Under Armour (UAA). The company has yet to decide if it will open brick and mortar stores, find a wholesale partner or sell its product through department stores as it prepares to increase its presence in London and Berlin.
Howie Long-Short: BORG already has some of its product in London stores and hasn’t gained any significant traction. The U.K. and Germany combined are generating less than 10% of company sales. To expect them to drive growth in 2019 is wishful thinking. CEO Henrik Bunge insists that Bjorn Borg’s fame/name will enable him to compete within the U.S. market. I’m telling you that they can’t compete and shouldn’t try.
Fan Marino: Not a tennis fan? Between 1974 and 1981 Bjorn Borg won 6 French Open Titles and 5 Wimbledon Championships. In 1979 he became the first player to win $1 million in prize money in a single season. He’s among the all-time greats.
Bjorn Borg Targets London, Berlin in Growth Push Leading to U.S.
Lululemon (LULU) reported Q2 profits ($.39 compared with $.35) and sales (7% compared with 4%) that beat analysts’ estimates and updated full year forecasts ($2.35-$2.42/share) that topped projections. CEO Laurent Potdevin attributed the continued growth to improved marketing, an effort to drive international sales and an increased focus on their e-commerce business. The company has also been working to increase its appeal to men and add technical innovations to their clothing that set them apart in a crowded athletic-apparel marketplace. Potdevin reiterated that the yogawear brand remains on a trajectory to hit $4 billion in revenue by 2020.
Lululemon Posts Surprise Profit Growth In Q2, Raises Guidance
Howie Long-Short: You keep reading about the warning signs of the athleisure trend coming to an end, but I don’t believe that to be the case. FINL and FL are struggling because brands are going DTC, not because the consumer no longer wants to be comfortable outside the gym.
Fan Marino: Part of the reason analysts projected lower Q2 profits/earnings numbers was because of an uptick in online markdowns. That’s great news for fans of the brands! I checked out their “we made too much” section and it has a TON of stuff with at least a 25% discount.
Lululemon Athletica (LULU) is taking Under Armour (UAA) to court, alleging patent and trademark infringement on a 4 strap, criss-crossing, sports bra design. With the sports bra market generating in excess of $1 Billion in annual sales and the athleisure market expected to generate $350 Billion by 2020, Lululemon is determined to protect their designs and market share. The company has secured over 3 dozen design patents to date and sued Calvin Klein in 2012 for copying a waistband design. Copycat competitors beware!
Lululemon sues Under Armour over $52 bra
Howie Long-Short opines: 4-strap, criss crossing bra? Sounds like a man’s nightmare.
Fan Marino says: Has any clothing item come further than sweatpants? If you wore sweatpants in 1995, people assumed you were overweight and had given up on life. If you wear joggers in 2017, people assume you live a healthy active lifestyle and are trendy. Amazing.
Under Armour (UAA) has hired former Aldo CEO Patrik Frisk to run the company’s day to day operations as President & COO. Founder Kevin Plank will remain as CEO. The move comes just 2 months after April’s announcement that the company had its first losing quarter since going public in 2005.
Under Armour brings in new president; Plank remains CEO
Howie Long-Short opines: This looks long overdue.
Fan Marino says: If we’re talking sneakers; I’ve got Nike, Adidas and Reebok (ADDYY). If we’re talking athleisure; it’s Lululemon (LULU) Rhone and Aesthetic Revolution. Mr. Frisk has his work cut out for him.