Lunar Capital Weekly Roundup
|Index / Fund / Rate||Start of Year||Last week||This Week||% change YTD|
|JSE ALSI||73 723||68 934||69 519||-5.70%|
|NASDAQ Composite||15 833||12 391||12 658||-20.05%|
|S&P 500||4 797||4 130||4 145||-13.58%|
|Prime Lending Rate||7.25%||9.00%||9.00%||24.14%|
|Lunar BCI WW Flexible Fund||165.68||148.08||150.04||-9.44%|
Company and Market News
Under Armour: a creator, marketer, and distributor of branded athletic apparel, released their Q1 2023 results last week. For the quarter, revenue remained flat at $1.3 bn compared to Q1 a year ago. Net income decreased from $59m in Q1 2022 to $8m in Q1 2023. The share price of Under Armour increased by 4.06% this week despite the disappointing news.
Under Armour operates in the athleisure/athletic apparel space with other brands such as Nike and Lululemon. Despite Under Armour and Lululemon making athletics-wear for the same purpose, Under Armour sells products to the mid-income market compared to Lululemon, who sell products to an upper-income market. An example would be if we compared the price of leggings. A pair of Under Amour leggings go for just under $75; whereas a pair of leggings from Lululemon can go for just under $100, with some leggings being priced at just under $120.
One of the things we like about premium brands, at Lunar Capital, is that they have higher margins compared to other brands. People that like a specific premium brand will stick to buying that brand compared to others. A downside, however, would be that in this current market, when interest rates are going up, and the disposal income of consumers is decreasing – consumers who were on the fringe of buying premium products may hold off on buying these products.
|Company||Market Cap @ 5 Aug 2022 ($bn)||PE Ratio @ 5 Aug 2022||Gross Margin||Net Margin|
Disclosure: Lululemon is held in the Lunar BCI Worldwide Flexible Fund.
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