Late Stage Capitalism
Physician, Long-Term Stock Investor with 30 Years of Experience
Lululemon is still one to avoid after ugly results, and its numbers don't yet reflect higher costs from oil prices driven by the Iran war. Per Wall St Engine, Americas revenue fell 3% with comparable sales down 5%, gross margin dropped 410 basis points, operating income fell 37%, full-year revenue and EPS guidance were cut, and Q2 EPS guidance of $1.76-1.81 was far below the $2.69 estimate. x.comÂ
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 has lost its way. Its brand and products are good, but its market is saturated. x.comÂ
Lululemon is an 800lb gorilla worth defending despite bad management and the politics around its skin-tight leggings. 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 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
Lululemon's 18% premarket drop looks like an overreaction given its improving margins. 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 not worth bottom-fishing even though the bad news will eventually be priced in, because forward estimates keep falling and a bottom is hard to time before fundamentals bottom. The business is not a zero: its stores are still busy, if less than before. There are better places to look for a bargain. x.com 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 no bargain at $99 and an 8x P/E, with revenue shrinking 4% and guidance slashed in two consecutive quarters. x.comÂ