Lulu is Showing some Upward Confidence. What to Consider?

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To say Lululemon has had their ups and their downs throughout the year would be an understatement of the year. But to be completely honest we’ve seen this with a ton of stocks over the past year. We’ve seen this stock not only get cut in half this year but also most recently we’ve seen this Canadian company attempt to work their way up as well most recently. So as a wise man once said, “What Gives?” Well to answer that let’s take a look at what’s happened to drop, what happened in their most recent earnings, and where we are now.
First, what beat up Lululemon this past year like being in the ring with a prime Mike Tyson (keyword = prime). Well to start they have slowing growth in sales that is noticeable from 2022 to 2024, which often signifies that the stock no longer has those crazy spurts and could risk plateauing to more stable movement. This was a leading cause for many to get out of the stock in such a way. There have also been a multitude of other problems including digital operations problems and the idea of a potential decline in quality for that still hefty price that Lululemon calls for. This also combined with a large fundamental problem of how the company is run shows almost a lack of caring in the product that does worry the investor, which is the way Lululemon handles robberies of its store. Lululemon seems to almost completely give in to robberies suggesting that they want to protect the workers, which worker safety is important, but they want neglect which is completely different and a foolish way to run a business. Lululemon suggests that their merchandise sold at its high prices is so cheaply made that it is almost insignificant when it is completely robbed and it would actually be wrong of the employee to think it is okay to call the police in such a situation. This has led to store closures because of consistent robberies and Lululemon stores all around the US and Canada having a significant uptick in these quick robberies of merchandise that seems to be given out so worthlessly. And we would once again mention how, while employee safety is key in these moments that happen too often nowadays, but to say that using law enforcement is wrong in a situation in which law enforcement is specifically there for is just a terrible move by possibly a foolish CEO who lacks idea of how to run a company.
But onto the next part their most recent earnings (whew wipes sweat off of forehead). We take a look back on their Q2 from August which showed another pretty successful beat coming out with $3.15 vs the estimate of $2.92 along with fairly solid revenue numbers that also beat year-over-year. So, all in all the stock seems in decent health and when taking a look at the upcoming December earnings many see potential for the company to show great results overall.
So, what’s the dealio then? Do we hate them or love them or simply are we indifferent at the moment? Well, it’s hard to say actually. They have pitfalls that led them to fall this past year that we mentioned above, plus the growing concern that people may be shifting their clothing taste with the upcoming generation past the athletic attire that we saw dominance with giants like Nike and Lululemon. But there has been a recent upward trend in the stock the past month or so that gives confidence to investors that maybe it could be going back up and it’s time to hop back on this train to see if it can recover. So a lot of the questions that we have include whether or not they can keep the trend of wearing their attire for the day-to-day (or do they call an audible and announce some new stuff), can they continue to try it secure their retail fronts in a safe way, and can they show that there is still more money to be made in the athletic clothing market. Well, we just have to see how this one plays out I guess is all we can say.