Post earnings LULU has slid harder and continues to fall off a cliff. I understand its trading low and it gets people excited to buy cheap.. thing is its going to get much cheaper.
Once a brand is deemed uncool or unpopular it can easily fall into a value trap that slow bleeds. Nike has been able to weather the storm as it has a iconic brand and has great leadership with brand collabs with major sports leaders. At the same time, its just classic and cool like coca cola.
Just think, sugar water is just sugar water so who cares which you drink? Nope.
Lulu is more in the territory of Under Armour which once was the man's version of lulu.. competitors came out and ate their lunch. Theyre a shell of themselves. Trades like butt and goes nowhere but down.
I dont want anyone getting burned but that's how I foresee the story playing out. Best to stay away.
Anyway what do you guys think? Can lulu figure out how to stop the bleed or are they donezo?
Posted by Solidplum101
20 Comments
I feel like yoga pants and “athleisure” apparel is largely commoditized at this point. I see more people wearing unbranded yoga pants these days.
Even the mighty Nike is having difficulty with their ongoing turnaround because a big brand name offers no moat. I agree that LULU is a value trap unless they start offering innovative products that people want.
This post is my signal that LULU has bottomed.
!remindme 6 months
There’s a pretty big traffic difference between a LULU store and a UA store.
Anecdotally I fell LuLu has never been more popular
Man, I can’t believe I missed this sub all this time – this is where are the financial analysis experts are eh!?!?
It’s going to be in even worse trouble soon
Just look at Bandier – tons of VC money, loads of influencers, heavy marketing, prime locations.
They’re now bust and trying to fire sell the IP for pennies on the dollar.
This market is saturated, there’s too much competition and the customer base is fleeting.
At the low end shein is clearing up. At the high end, Alo and Vuori now are the hot thing.
Lulu is in the terrible position of being the expensive brand that is mid and seems dated.
well then why don’t you short the hell outta it?
In recession (which could be coming), their product is one of the first, which is going to be removed for 90% of current customers. It is all fun when people have lots of excess money to splurge, but wait till panic hits the markets
Nah I don’t think so. I think we’ve just hit a period of increased competition and consumer weakness. LULU still makes the best athletic/athleisure gear, they’ll be back.
Chart definitely looks like it wants to go to $140. Might catch a bounce then.
Have you ever went to a mall? Lulu is consistently one of the busiest stores in a mall, and the markup on products is very high. It’s also a middle/upper-middle class brand that isn’t necessarily hit as hard by poor economic conditions as generally speaking, people making $100k are doing fine and those are the kind of people buying Lulu.
25% growth in china, 19% rest of world growth ex Americas that grew 1%. No debt. Negative net debt. Strong balance sheet. Sub 12x FW PE. This all gets me excited so I loaded.
It’s the best value play in the consumer discretionary softlines vertical currently imo alongside CROX and TGT. Contrarian relative to Reddit feelings but it’s always like this when nearing the bottom.
Then short it buddy boy. Let’s see that position
This is why I stay away from apparel. Fashion and what is “on” has never been my domain, which plays such a big part in this space. I would advise that the ones to invest here should be the ones that enjoy keeping up with fashion trends as that would be their “edge”
Fashion brands is such a brutal industry. So hard to know what brands get hot. My GF told me a few years ago about Abercrombie getting hot again and I was like “uh the brand huge with middle schoolers in the 90s? Yeah okay…”
Oddly I really like UA from the ankle up (shoes still need a looooot of work). Almost all my gym/running gear is UA and looks good and holds up, but I get your point.
Sorta going against my own skepticism because I did buy 230 shares of DECK. Their fundamentals are really good and Hoka is everywhere near me. Definitely don’t feel fully confident in that investment though.
I don’t know. For your coke analogy, it legitimately tastes better than their competitors. I personally like Coke more than Pepsis, RC, generics, and small niche bottled companies:
Lulu is better quality than Nike and has nice designs/fits. Sure it has gone down in quality, but what hasn’t.
Lulus are still packed in the city I live in and I see it on yuppies everywhere. Now things all anecdotal, so I don’t know how it applies to the stock price.
UA sucks all around. Crappy brand image, terrible quality, bad designs/fit, and a price tag that isn’t even remotely justified for the quality.
TLDR: Lulu is still popular.
I’m always blown away by how clueless this sub is when it comes to clothing brands. I’m not a LULU investor nor do I own any, but comparing Under Armor at any point to current Lulu is hilarious. Lulu is being worn by every age group, every income level covets it, and it is basically a cultural uniform for a certain type of woman at this point. On top of that, there is more hype and buy in behind the brand right now than at basically any point in time.
People who care about how they look are going to be buying Lulu stuff for a long time.
Are we gonna see Warren Buffett in lululemon pants?
!remindme 6 months
was this written by camel toe lobbyist?