The darlings of athleisure, Lululemon, have seen its stock explode over the past couple of years taking the business to total domination…
Only for its stock to start floundering in recent months.
Here’s what’s happening…
Lululemon’s Stock Tumble
Lululemon stock came with good and bad news during the company’s latest earnings call.
Starting with the good, the company reported 7% year-over-year growth as well as an 11% boost in their net income. All in all, these results were better than industry analysts had anticipated.
As for the not-so-good…
LULULEMON STOCK IS DOWN 40% YEAR TO DATE, WITH INVESTORS WORRYING THAT THE IRON GRIP THE COMPANY HAS ON THE ATHLETICS INDUSTRY IS STARTING TO LOOSEN
Besides the stock, the company’s growth is also slowing, with comparable sales staying stagnant.
While the company saw an explosion of revenue after the pandemic, viral products, such as the belt bag, helped maintain the levels of growth.
But according to the company, all is well. CEO Calvin McDonald assured investors that the missed sales were due to issues in inventory. He claimed that the company saw fewer sales because there was less variety in legging colors and sold-out bag styles.
However, this is indicative that the company as a whole could be losing the focus of its biggest market, the U.S., as it expands into a broader athletic brand…
Not just a yoga brand.
But the company should tread carefully, as two smaller competitors are coming up to pick up the brand’s slack.
Alo Yoga and Vuori are coming for Lululemon’s crown and stock price. Together, the athletic brands have a combined annual revenue of $1.5 billion…
Too big for Lululemon to ignore.
What’s Next For The Brand?
As a whole, the North American Sportswear market has been slowing down.
And as they say, misery loves company. Many brands that made huge gains during, or following the pandemic are now starting to flounder. In a similar vein, Peloton is trying to save itself from bankruptcy.
There might still be hope for the company. Lululemon is expecting revenue growth of 11-12% before the year ends, thanks to developments in their worldwide markets.
But it’s going to take more than blind faith to fix Lululemon stock.
Hopefully, the brand is ready to work it out.
Be Great,
GCTV Staff
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