Summary

• Lululemon Athletica is a hold at $124, down over 40% YTD and trading at under 10x forward earnings.
• LULU’s Americas segment, 71% of revenue, faces two years of negative comps and ongoing margin pressure, while international growth offsets domestic weakness.
• The company boasts elite profitability: 56.6% gross margin, 19.9% operating margin, zero debt, and $1.6B operating cash flow. But growth and momentum have sharply deteriorated.
• Upcoming catalysts include a June 25 shareholder vote, the September arrival of a new CEO, and potential board changes amid an activist campaign.

A couple of months ago I was close to calling lululemon athletica (LULU) a sell. The Americas' business, 71% of revenue, was shrinking. Earnings were guided to fall. The founder was at war with the board. None of that has changed. What

2.09K Followers

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.