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

Nike's fundamentals have not yet followed, and insider buying by CEO Elliott Hill and board member Tim Cook did not fix the business. Q1 revenue fell about 4% to $11.2B, with China down 26%, Nike Sportswear down low double digits and Jordan down mid-teens. Management warned China could get worse and some turnaround pain could extend into fiscal 2028. Performance grew high single digits, running double digits and North America returned to growth, so Nike is not being written off. x.com 

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.com 

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.com 

Nike, like other apparel makers, is uninvestable because a durable moat is near impossible in this business. Consumer preferences keep changing, requiring constant new marketing to keep people excited, and making a physical product leaves an inherently low-margin business with little long-term pricing power. A major turnaround is possible, but the business model gives no confidence in its long-term strength. x.com 

Nike's push to reposition as a premium sports brand looks like the right route to recovery, including in Greater China. New CFO Dave Denton was clearer, and Alex Arnault's board seat, Jordan's return to scarcity, elite athlete deals and less discounting support it. EPS was fairly strong and margins are improving; guidance looks set deliberately low to beat, since management says the decline largely stems from its own choices. The dividend is safe; a full turnaround may take 3-5 years. x.com  … Show more

Nike's turnaround is going to take longer than expected, so its earnings no longer anchor the valuation. It may be time to value Nike as a sum of its brands rather than on EPS; at some point that collection will become underpriced, much as Tapestry did during Covid. x.com 

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.com 

Nike's brand concerns look priced in; stabilization, not sudden revenue acceleration, is what the speculative long needs. A few good campaigns and a return to large stores could help, though China consumers will be a drag. Short-term EPS is a poor indicator, and customers may return after trying other brands. x.com  x.com 

Nike's turnaround is looking much longer than bulls expected, and about 17x forward earnings is not cheap for a business growing low single digits. China sales fell 26% FX-neutral while Adidas' Greater China sales grew 15%, pointing to a Nike problem, not a China problem. Sportswear fell low double digits with Dunk revenue down about 50%, Jordan fell mid-teens, and most PACE savings are expected only in FY29-30; Performance grew high single digits. The must-buy price is $25. x.com  x.com  x.com