LongGameEquity
Long-Term Investor, AI & Software
Lululemon is not that tempting even after falling from $500 to about $100, because cheap does not mean buy. At about 1x sales the market prices in roughly zero growth, and analysts expect about $13 of EPS by 2029; at an 8x P/E that is only about $104. Agreeing with @HKIStrategies that the stock may simply move sideways for years, that would still mean losing money to inflation. 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
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 looks cheap at about 5x cash earnings, versus the 12x retailers usually get. Fair value sits at $221.42-$281.80, or 12x next year's cash earnings give or take 12%, leaving the $101.30 stock 54% below the low end. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. 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 a classic value trap: EPS guidance fell by a third, so a lower share price is no cheaper, and with EPS likely flat or down for 2-3 years it may need to test the low $80s. Dozens of influencer-led apparel brands selling through Shopify, plus Alo, Vuori and GymShark, offer better products at lower prices without its costly store base. Its mediocre products at premium prices cannot win that fight, and a quick turnaround is unlikely. x.com x.com x.com x.com x.comÂ
Lululemon's 18% premarket drop looks like an overreaction given its improving margins. 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's 9.4 times forward earnings looks like a value trap, because US brand fatigue may be structural rather than cyclical. A 44% drop this year and a low multiple invite bets on mean reversion that may not come. x.comÂ
Lululemon trading at about 7x earnings is absurdly cheap, among the most mispriced stocks around. 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
