Three Companies to Watch in the Health Craze
Kaitlyn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With the world sports and fitness clothing market set to reach $126 billion by 2015, there is room for explosive growth within this market. With dramatic lifestyle changes fueled by a growing obesity epidemic in the United States, along with an aging population that is focused on fitness and nutrition, there is room for drastic growth within the global health and wellness industry. Three companies have innovated well in a market eager to lose weight and eat healthy.
Lululemon (NASDAQ: LULU) was beaten by the Street in March for a see-through yoga pants recall. However, this company is powered by brand ambassadors that have created a cult-like following within the yoga community. Currently, revenue for this apparel powerhouse sits at $485.5 million, an increase of 31% for the year.
While Lululemon understands the power of retail outlets on the ground, most of its business transactions are through e-commerce and brand ambassadors. While gross profit has increased 31% to $274.5 million for the first quarter, Lululemon is pushing forward with product innovation and growth into new markets. CEO Christine Day said that Lululemon will start testing the market in 15 different countries, without taking on long term debt.
UnderArmour (NYSE: UA) increased first quarter revenues 23% to $472 million and raised full year guidance from $2.21 billion to $2.23 billion for top line revenue. This performance apparel company is continuing its growth streak since its IPO in 2005. Shares have gone up more than 400% since its IPO, and UnderArmour has released first quarter growth of over 20% for over 12 straight quarters. With focus on product expansion, UnderArmour revealed future plans for huge growth in its investor conference call. UnderAmour has been expanding efforts in international supply chain logistics, with ten offices projected to open in the next year outside the United States.
A sponsor of the upcoming Olympic games, UnderArmour plans to grow international awareness of the brand. Sales in Latin America grew over 6%, while total global sales grew 41% to $31 million. With the footwear industry projected to be valued at $84.4 billion in 2018, according to Transparency Market Research, UnderArmour hopes to cash in with projected sales doubling to $4 billion by 2016.
Groceries delivered to the masses
Amazon (NASDAQ: AMZN) announced a grocery line called AmazonFresh. Amazon Fresh is a delivery service that ships groceries directly to the shopper's door. According to a Reuters report, the company plans to expand its business to Los Angeles and San Francisco within the next year. Using locations that already use same day shipping, Amazon's operation strategy is already scaled to take on mass market grocery shipping.
With a 220% surge in stock price in the last five years, Amazon continues to expand into new markets to drive growth. Grocery shopping is a frequency business, with delivery up to twice a week for the average shopper, and Amazon hopes to profit from bottom line growth from added basket purchases. Although grocery margins aren't as profitable as higher priced electronics, this market will continue to grow as Amazon stakes a foothold in this $568 billion industry.
With the more people obsessed with healthy living, these three companies have found a different way to innovate in a ever expanding world. With a proven track record of disrupting an industry, Amazon no doubt will change the way that people purchase food in future years. UnderArmour continues to bring quality products to athletes around the world, while Lululemon has created a community around the power of exercise.
Lululemon has the potential to grow its sales by 10 times if it can penetrate its other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.
Kaitlyn Tokay has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Lululemon Athletica, and Under Armour. The Motley Fool owns shares of Amazon.com and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!