Wasteland Capital
Global Markets Investor, US, UK & European Assets
Brands have no moat, only heat cycles, and Lululemon, at new 8-year lows alongside Nike at 12-year lows, is cooling. People will always buy new clothes to look good, but that requires freshness, and another pair of Lululemons no longer delivers it the way it did in 2020. Winning means spotting which stage a brand is in. x.com x.comÂ
Lululemon's premium-brand moat looks weak as Texas Attorney General Ken Paxton investigates possible forever chemicals in its activewear. It charges $150 for synthetic polyester and nylon made the same way as cheap pants and sells it as premium, so health concerns over plastic clothing undercut the brand. x.com x.com x.comÂ
Lululemon's problem is its pricing, not a weak consumer. Shoppers are fine but aren't buying its products because the prices no longer make sense, which spells trouble for its margins. x.comÂ
Lululemon has lost its way. Its brand and products are good, but its market is saturated. 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 losing customers because it stopped innovating and its brand stance alienated buyers, hurting its own stock as happened with Nike. Shoppers are shifting to Alo, Vuori, Hoka, On and others, and its quality no longer looks as strong. Lululemon shares have fallen to their lowest level in nearly 10 years, per Kalshi. x.comÂ
Lululemon, Nike, Under Armour and On look like cursed value traps because rising competition and unpredictable fashion trends keep eroding their positions. Lululemon has lost its niche dominance as the luxury standard and is now one of a dozen rivals, such as Vuori, Alo and Athleta, chasing the same buyers. Lululemon sits at six-year lows, Nike at 12-year lows, Under Armour at all-time lows and On back at 2022 levels. The products may still be good, but competition is overwhelming. x.com x.com … Show more
Lululemon's 18% premarket drop looks like an overreaction given its improving margins. x.comÂ
Lululemon looks headed out of business as its customers move to Alo, and another earnings report hammered the stock. Suburban women now wear Alo, at least until they switch to the next shiny brand in a few years, which is why retail apparel is not a long-term investment. x.comÂ
Lululemon created its category but has no moat: Amazon dupes are indistinguishable from real Lululemon pairs, even to a regular customer. 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 stock to avoid around earnings, good or bad, as apparel names almost always are. Too many investors were fooled by its compounder story coming out of Covid. x.comÂ
