Stockchase Insights LuLulemon Athletica LLL-T BUY ON WEAKNESS Sep 15, 2025

Problems lie with product design, and senior people (key designer) leaving the company. But the PE has fallen and she's looking at it. LULU faces strong competition. Wants to see them getting back on track, first. Retail as a whole is very volatile.

Just bought it when shares were beat up. Their North American shares have sold this year, due to more competition, a product issue (a new fabric did not flatter customers and has been getting negative reviews), and they're focused on growth in China when the market won't touch anything to do with China. The PE has fallen from 30x to 19x. Strong margins that outpace their peers. They are innovative and one hit product away from success.

Struggling. Demand is, perhaps, satiated. Started narrow with yoga pants and expanded. Crosses the gender boundaries. Not enough to right the ship.

We think the chances of recovery are decent. It has a solid brand and niche, but has experienced execution issues. Based on its solid history, we believe it can solve these issues. Its valuation is near historical lows, and any positive news could see an amplified stock impact. Here are prior comments on the second quarter: EPS of $3.15 beat estimates of $2.96. Revenue of $2.37B missed estimates of $2.41B. Sales guidance was dropped but earnings guidance largely maintained. Fast-tracking innovation and better near-term execution on women's are key to Lululemon regaining momentum and reaccelerating sales. The company's weaker 2Q results were largely due to less newness in women's colors, prints, silhouettes and patterns, reducing conversion, even as traffic rose in stores and online. Below-consensus 3Q sales guidance for a 6-7% gain and a lowered 2024 view reflect 2Q's weakness persisting. Any upside to guidance hinges on customers' response in 2H. Management expects to return to historical levels of newness in the spring. Strength in men’s and international, along with an improving US business next year, are key to reaching 2026's $12.5 billion revenue goal. Gross margin may still be supported by unchanged markdowns for the year, in line with 2Q.
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Excellent company with strong stock price performance. Retailing skill very good. Products highly desired by the market. Recent weakness in share price - a good time to purchase. 

Yes; we would be comfortable buying LULU today for a 3+ year holding period (suggested).
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LULU has struggled a bit in the past few years but is putting things back together now. The last quarter was good and it has beaten estimates in eight straight quarters. The loss of the chief designer was a blow but new product sales look fine now. Valuation has really dropped, now at 22X earnings. Historical range is more than twice that. The balance sheet and cash flow are very strong. Growth expectations look good. That being said, an economic slowdown is not going to help here. But we think its 31% one-year decline reflects the situation fairly well. We still like its long term growth prospects and high per-square foot sales growth. Overseas will likely show faster growth in the short term, from a smaller base.
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Tariffs. A lot of their products face them. This is why shares have fallen this year, but he is buying it at current low levels. It could take a while for this to work.

He never buys clothing or fashion. The trends and competition change so quickly. LLL stores are still doing well, but there's heavy competition, tariffs and tapped-out consumers.