Joel
Long-Term Growth Investor & Options Trader
Lululemon faces a new potential overhang while its business is already losing ground to Alo and Vuori. Founder Chip Wilson, who owns about 8.6% of the company, is reportedly divorcing with no prenup, per Unusual Whales citing the New York Post. That does not guarantee he sells shares, but it puts a nearly $1 billion stake in play. With the business under pressure, more downside before a turnaround begins would be no surprise. x.comÂ
Lululemon's demand keeps deteriorating, and takeover hopes are a risky reason to hold it. It cut full-year guidance again, with Q2 revenue down 4%, Americas sales down 8% and comparable sales down 9%, sending shares below $100 for the first time since 2019. Michael Burry calls it his largest position and sees a possible private equity takeover, but a Stage 4 decline can last longer than expected, as PayPal holders learned when Stripe chose not to bid. x.com x.comÂ
Lululemon is a dumpster fire now that founder and largest investor Chip Wilson is helping create new competition, starting an athletic-focused business, per Bloomberg. x.com x.comÂ
Lululemon is cheap at around 11x earnings with gross margins above 50%, while many people, including the founder, are pushing for a turnaround. Sales growth is tiny, but the balance sheet is solid and the company makes an interesting acquisition target. The reported collapse of talks with founder Chip Wilson, per WSJ via @DeItaone, looks good for the stock: Wilson may try to take it private or bring in a strategic buyer. x.com x.comÂ
Lululemon is probably going lower because sales and margins are imploding while inventory grows, and a new unproven CEO is coming in. Q3 guidance calls for revenue down 10-11%, North America down mid-teens and inventory up low single digits; full-year revenue should fall 5-7% with inventory up mid single digits. Even granting $6 of annualized EPS versus a ~$4 run rate, 12x for an off-trend retailer implies about $70, versus $100 after an 18% drop. x.com x.comÂ
Lululemon's CEO saying the company continues to navigate some challenging dynamics is corporate speak for serious trouble. The stock fell 18% after hours on the results. x.com x.comÂ
Lululemon is an 800lb gorilla worth defending despite bad management and the politics around its skin-tight leggings. x.comÂ
Lululemon is a value trap with no sign its business decline is reversing. Comparable sales in the Americas fell 10% in Q2 2026, worse than Nike's, and management now expects full-year revenue to fall 5-7%, with consensus estimates likely to be cut. Earnings are projected to drop to $1.3 billion by 2028, about 30% below 2025. The trailing P/E of 9x looks cheap, but the forward P/E is higher at 11x as earnings fall, despite the stock losing 75% of its peak value. x.comÂ
Lululemon is losing its customer to Alo Yoga, the shiny new brand, while its shareholder base shifts toward value investors. @BillBrewsterTBB notes most women he talks to have gone from fans to lukewarm, while those who like the stock are value-investing men, a mismatch that shows the perils of a shifting shareholder base. x.comÂ
Lululemon's 18% premarket drop looks like an overreaction given its improving margins. x.comÂ
Lululemon needs its founder Chip back as CEO, and he is getting board seats rather than the CEO job. New CEO Heidi starts September 8, while founder-CEO performance is what the company needs. Below $100 a share, its enterprise value is about $14B, less than the roughly $19B Nvidia has put into Poolside and Hugging Face. x.comÂ
