leki
Equity Investor, Multibagger Research, Technical & Fundamental Analysis
Lululemon remains one to avoid after another dismal quarter, with poor merchandising, product strategy and leadership. The shares fell 19% after hours on the results. The leadership handover was too slow: Heidi O'Neil, formerly Nike's President of Consumer and Product, was named CEO on April 22, 2026 but only takes over on September 8, a four-month gap a company should not allow. 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 risks following Nike's path of margin collapse from peak valuation. Lululemon peaked at 14x EV/sales and 82x forward earnings in 2020, while Nike's EBITDA margin has collapsed from 18% in 2021 to 10.7% today. x.comÂ
Lululemon and Nike are cheap, but not turnaround stories. A stock falling 80-90% does not make it a turnaround, and turnarounds often fail to happen; Under Armour investors have waited since 2016. Unless both companies get strategy, go-to-market and customer focus right, their risk-reward carries significant risk compared with other opportunities. x.comÂ
Lululemon offers better risk/reward than Nike if it is not broken, trading below 5x EV/EBITDA versus Nike's 14x. Nike's turnaround through wholesale is very hard for a $50B revenue business facing strong rival brands, less product control, price competition and channel conflict across multiple product lines. Nike may have a better near-term chance of beating estimates and is a more evergreen brand, but Lululemon looks increasingly preferable. x.com 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 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 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 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