Should lululemon athletica Worry About Nike's New Yoga Collection?

On the heels of a solid fiscal second-quarter earnings report, Nike (NYSE:NKE) announced it was launching a new yoga collection for men for the first time. This is while the company also sees a big opportunity to expand its apparel category overall.

However, Nike's core business is still selling sneakers. That's not going to change, and that's also why lululemon athletica (NASDAQ:LULU) should continue to do fine. Just as Nike has been successful turning a basketball shoe into a fashion statement, Lululemon has accomplished the same in athletic apparel. Both companies are really good at what they do best, and that will protect Lululemon's competitive position from larger rivals.

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Why Nike wants to enter Lululemon's turf

Most of Nike's business is dependent on sales of footwear, which makes up about two-thirds of annual revenue. Nike has been doubling down on its innovation in running and basketball shoes to solidify its lead against a strong push from Adidas. Last quarter, Nike grew total revenue by 14% year over year on a currency-neutral basis. The top line was driven by 15% growth in the footwear category. 

However, during last quarter's conference call, CEO Mark Parker called apparel "one of Nike's greatest growth opportunities." Nike has experienced double-digit growth in apparel, and so have other retailers. Lululemon is currently ahead of schedule in its plans to reach $1 billion in annual revenue in its men's category. Other retailers, particularly Gap's Athleta brand, have ramped up efforts to target men, as well.  

The move into men's yoga clothing by the swoosh brand is not so much an attempt to go after Lululemon as it is an opportunity to diversify its revenue more, especially into the broader apparel market that has been growing faster than Nike's core sneaker business.  

Lululemon looks unstoppable

While Nike is gradually investing more in apparel, Lululemon recently raised its outlook for the current quarter (which ends in January) for revenue and earnings based on strong sales through the holiday season. Lululemon now anticipates revenue to be in the range of $1.14 billion to $1.15 billion, an increase from the previous expected range of $1.115 billion to $1.125 billion. 

These are fantastic results for a brand that is on the high-end range of the price spectrum in the industry. The items in Nike's yoga collection are priced around $50 to $75 for tops and bottoms. This is significantly cheaper than Lululemon, where a T-shirt can cost as much as $88 and a pair of pants can cost as much as $178. Despite the price discrepancy, Lululemon continues to charge forward.

Lululemon and Nike have distinct brands

Over the last few years, Lululemon made a lot of improvements to the business operationally to drive accelerated growth in revenue through 2018. Ultimately, however, Lululemon's robust 21% growth in revenue in the fiscal third quarter is a result of making products customers want to buy. That might be stating the obvious, but it's important to remember that Lululemon's strong revenue growth over the last year is driven by customers paying premium prices for what they perceive as clothing far superior to your average workout clothing.

There's a distinct difference between Nike and Lululemon in how they design clothing. For example, Lululemon's design teams put just as much focus on how clothing feels against the skin, particularly when you're sweaty, as they do on how it looks. Lululemon calls it "engineered sensation." 

This attention to detail and the years of expertise Lululemon has gained in designing proprietary synthetic fabrics is the same advantage Nike has gained over the years working on innovative cushioning technology for running shoes. It's this distinction between the two companies that should keep Lululemon's momentum going, even with big dog Nike entering the market. 

Research Analysts’ Weekly Ratings Updates for Limelight Networks (LLNW)

Several analysts have recently updated their ratings and price targets for Limelight Networks (NASDAQ: LLNW):

7/25/2018 – Limelight Networks was downgraded by analysts at Zacks Investment Research from a “hold” rating to a “sell” rating. According to Zacks, “LIMELIGHT NETWORKS, INC. is a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust their robust, scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. LimeLight’s architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light — directly to the access networks that consumers use every day. LimeLight’s proven network and passion for service assures their customers that every object in their library will be instantly delivered to every user, every time. “ 7/20/2018 – Limelight Networks had its “buy” rating reaffirmed by analysts at Cowen Inc. They now have a $6.50 price target on the stock. 7/19/2018 – Limelight Networks was upgraded by analysts at TheStreet from a “c” rating to a “b-” rating. 7/16/2018 – Limelight Networks had its “buy” rating reaffirmed by analysts at DA Davidson. 6/30/2018 – Limelight Networks was downgraded by analysts at BidaskClub from a “sell” rating to a “strong sell” rating. 6/26/2018 – Limelight Networks was downgraded by analysts at ValuEngine from a “strong-buy” rating to a “buy” rating. 6/21/2018 – Limelight Networks was downgraded by analysts at Zacks Investment Research from a “strong-buy” rating to a “hold” rating. According to Zacks, “LIMELIGHT NETWORKS, INC. is a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust their robust, scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. LimeLight’s architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light — directly to the access networks that consumers use every day. LimeLight’s proven network and passion for service assures their customers that every object in their library will be instantly delivered to every user, every time. “ 6/20/2018 – Limelight Networks was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “strong-buy” rating. They now have a $5.75 price target on the stock. According to Zacks, “LIMELIGHT NETWORKS, INC. is a content delivery partner enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust their robust, scalable platform to monetize their digital assets by delivering a brilliant online experience to their global audience. LimeLight’s architecture bypasses the busy public Internet using a dedicated optical network that interconnects thousands of servers and delivers massive files at the speed of light — directly to the access networks that consumers use every day. LimeLight’s proven network and passion for service assures their customers that every object in their library will be instantly delivered to every user, every time. “ 6/12/2018 – Limelight Networks was downgraded by analysts at BidaskClub from a “hold” rating to a “sell” rating.

LLNW stock traded down $0.06 during mid-day trading on Thursday, reaching $4.42. 11,303 shares of the stock traded hands, compared to its average volume of 915,746. Limelight Networks, Inc. has a 52 week low of $3.21 and a 52 week high of $6.05. The stock has a market capitalization of $502.38 million, a price-to-earnings ratio of -221.00, a price-to-earnings-growth ratio of 10.81 and a beta of 2.32.

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Limelight Networks (NASDAQ:LLNW) last released its quarterly earnings results on Thursday, July 19th. The information services provider reported $0.04 earnings per share (EPS) for the quarter, beating the Zacks’ consensus estimate of $0.03 by $0.01. Limelight Networks had a net margin of 6.43% and a return on equity of 1.99%. The company had revenue of $50.25 million during the quarter, compared to analysts’ expectations of $49.64 million. During the same period in the prior year, the company earned $0.03 earnings per share. The business’s quarterly revenue was up 10.8% compared to the same quarter last year. equities analysts forecast that Limelight Networks, Inc. will post 0.03 earnings per share for the current fiscal year.

In other news, insider Kurt Silverman sold 7,500 shares of the company’s stock in a transaction dated Friday, July 20th. The shares were sold at an average price of $5.00, for a total transaction of $37,500.00. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. Also, CEO Robert A. Lento sold 40,000 shares of the company’s stock in a transaction dated Monday, July 2nd. The shares were sold at an average price of $4.46, for a total transaction of $178,400.00. The disclosure for this sale can be found here. Insiders have sold 109,271 shares of company stock valued at $532,344 over the last 90 days. Corporate insiders own 10.60% of the company’s stock.

Institutional investors and hedge funds have recently made changes to their positions in the company. Campbell & CO Investment Adviser LLC acquired a new position in shares of Limelight Networks during the second quarter valued at about $125,000. WINTON GROUP Ltd acquired a new position in shares of Limelight Networks during the first quarter valued at about $172,000. MetLife Investment Advisors LLC raised its position in shares of Limelight Networks by 172.6% during the first quarter. MetLife Investment Advisors LLC now owns 43,835 shares of the information services provider’s stock valued at $180,000 after buying an additional 27,754 shares during the last quarter. The Manufacturers Life Insurance Company raised its position in Limelight Networks by 18.9% in the first quarter. The Manufacturers Life Insurance Company now owns 71,533 shares of the information services provider’s stock worth $294,000 after purchasing an additional 11,383 shares in the last quarter. Finally, Wells Fargo & Company MN raised its position in Limelight Networks by 36.4% in the fourth quarter. Wells Fargo & Company MN now owns 105,431 shares of the information services provider’s stock worth $465,000 after purchasing an additional 28,159 shares in the last quarter. 69.54% of the stock is owned by institutional investors and hedge funds.

Limelight Networks, Inc provides content delivery and related services and solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers services and solutions for businesses to deliver their digital content across Internet, mobile, and social channels. It provides Orchestrate Platform, a suite of integrated services comprising content delivery, video content management, Website and Web application acceleration, Website and content security, and cloud storage services.

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