Lululemon Athletica (Nasdaq; LULU) designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. Its share price has plummeted this year, losing 40%, hitting a 52-week low, likely due to lower-than-expected Q1 guidance and broader weakness within its sector. But unlike other premium or sportswear brands, LULU has a positive guidance for 2024 with revenue projections climbing in the low-double digits (unlike Nike, who expects to sales to dip). Rivals such as V.F. Corp and Adidas have negative earnings trailing twelve months. In the last 3 years, net revenue, operating income and net income have all grown. LULU has high profitability metrics like a gross margin of 58.3% and a operating margin of 22.2% in 2023. Earnings remain robust expecting to go from $12.20 in diluted EPS (2023) to somewhere between $14.27 to $14.47 for 2024. It has 1.9b in cash and 1.4b in debt. It also boasts of a large and positive free cash flow as well as a return of equity of 41%. Lululemon’s store count is growing, and expansion abroad could prove lucrative, especially in European and Asian markets. The company should explore expanding their brand scope by advertising with social media influencers (as competitors have). Lululemon is also in a good position to sponsor athletes in the upcoming Olympics.
Revenue (in thousands) for 2023:
United States: $6,346,392
Canada: $1,285,255
People’s Republic of China: $1,134,293
Other geographic areas: $853,338
Total: $9,619,278
“The Company’s Power of Three ×2 growth plan calls for a doubling of the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key pillars of the plan are product innovation, guest experience, and market expansion and the growth strategy includes a plan to double men’s, double e-commerce, and quadruple international net revenue relative to 2021.”
*I own and recommend shares of LULU*
———————UPDATE AUGUST 2025—————–
Lululemon’s share price has plummeted over the last 6 months due to economic uncertainty. It now trades very cheaply at a 13 trailing/forward price earnings ratio and maintaining some growth prospects and “expect net revenue to be in the range of $11.150 billion to $11.300 billion, representing growth of 5% to 7%, or 7% to 8% excluding the 53rd week of 2024”.
“Diluted earnings per share are now expected to be in the range of $14.58 to $14.78 for the year”. TTM diluted earnings was 14.71.
CFO Meghan Frank said on the earnings call that the company’s outlook assumes the current 30% incremental tariff on China and an incremental 10% levy on the remaining countries where the retailer sources from.
During 2024, 40% of Lululemon’s products were manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 11% in Indonesia, 7% in Bangladesh and the remainder in other regions. All countries mentioned above have tariff rates of 19-20%, China is still negotiating over its 30% rate.
“The guidance does not reflect potential future repurchases of the Company’s shares.”
“Over the last 12 months, management has repurchased $1.77 billion in stock (8% of market cap). As shares outstanding come down, the company will grow its earnings per share”
*I re-bought shares of LULU*
Devlin Demontigny 