The Latest In College Trends: The Retail Sector
Sometimes even experienced investors and traders get so bogged down by top-down growth trends that they miss the grassroots growth movements.
On the other hand college students, who make up 20 percent of the general U.S. population, are much more aware of their surroundings. In fact, they may be onto something big.
Below are a few trends sweeping U.S. campuses this year; trends that may also drive growth in the following companies in the coming months.
Lululemon Athletica (NASDAQ: LULU )
Though Lululemon hit a rough patch after welcoming in its new CEO, Laurent Potdevin, late last year, the famous stylized ‘A' logo remains an iconic campus symbol across the country.
Walking into a campus gym can be like walking into a Lululemon store itself: form leggings to tops to headbands. Even if the gym isn't your scene, the black “wunder unders” are a staple of every girls' closet.
With 2013 comparable sales rising four percent and DTC sales up by 33 percent, Lululemon may be well on the road to recovery, with college girls carrying some of the team.
Opening 43 net new corporate stores this past quarter wasn't enough to satisfy all of the international demand. Immense growth opportunities remain in the Asian, European and Canadian markets -- all regions where Lululemon is working on opening stores.
Ray-Bans (NYSE: LUX )
What better way to meet spring than with a brand new pair of Ray-Bans -- or so the college student philosophy apparently goes. From classic aviators to the “clubmasters” to the “new wayfarer”, once they come out for the summer season, they never go back in.
Luxottica, the umbrella company that encompasses Ray-Ban, experienced an unprecedented growth in sales of 3.2 percent in FY 2013, while its EPS saw a lofty 12.2 percent boost. And that may be just the beginning.
The eye-wear market was valued at $81 billion in 2011, and is positioned to grow to $130 billion by 2018, according to Transparency Market Research. No doubt Luxottica can harness that momentum, driven first and foremost by emerging markets.
Plus, partnering with Google (NASDAQ: GOOG ) to create the new Google Glass eyewear could be a pivotal long-term move for growth, as well.
Timberland (NYSE: VFC )
Women aren't the only ones keeping up with the latest trends. From boots to boat shoes, Timberland seems to be the go to brand for male college students this year. “Tims” derive their versatility from style and their practicality from their robust build; both make them a necessary investment for a college student.
As the Eurozone figures grow stronger, so will those of VF, the current parent of Timberland, since Timberland is VF's most developed brand in Europe when it comes to sales.
The North Face (NYSE: VFC )
Apparel and footwear giant V.F.Corp has more to show for itself than Timberland, and college students seem to be way ahead of the curve. The company's North Face coats got them through the recent polar vortex, its windbreakers are easing them into Spring -- and the backpacks, well, they're a fashion statement in and of themselves.
The North Face, Timberland and Vans together accounted for 56 percent of V.F.'s 2013 revenue, which grew by a total of five percent in the last year. V.F.'s international business expanded by eight percent and as emerging markets crave more of both brands, V.F. is following up on that call.
Michael Kors (NYSE: KORS )
What is it about sparkly things that makes many women unable to resist the urge to splurge? Let's consult Michael Kors; whose watches, handbags, leather jackets and other small accessories are sweeping the college-age nation.
Despite unexceptional earnings results for the past three quarters, due to decelerated growth, Q3 in 2013 finally showing a reversal. Surpassing the one billion quarterly revenue mark for the first time ever could be a powerful signal for new investors.
While the company's target demographic has so far been in North America and Europe, it has opened a new store in China and two in Brazil. It's international presence in both of these regions will likely rise in the coming months.
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