Lululemon (LULU) is the latest retailer to feel the Black Friday fuckery. The stock is tanking 6% on an FBR note. It’s now down 17% over the last three months.
The piss poor performance of the stock can no longer be blamed on the great “see through” scandal of 2013. Rather, what we have here is a good old-fashioned case of margin compression. Selling more stuff at cheaper prices.
Well compress this; Lululemon does not deserve to be a public company. It’s been a clown show in the C-Suite and the Sweed, Laurent Potdevin, has done next to nothing to turn around the company since taking over as CEO last year.
People aren’t buying the $100 yoga pants Lululemon is selling. The people visiting the stores are opting for the cheaper clearance stuff. “Who gives a shit if it is see-through, we just want reasonably priced pants.” There’s 2x the number of clearance shit in Lululemon stores this year versus last.
Per the FBR note: “Given increasing competition in women activewear and a competitive men’s market, we think that LULU may not be able to claw back margin with higher selling prices on product.”
More color on the FBR note: “Moreover, she predicts that Lululemon will struggle to keep up double-digit or even low-single-digit same-store sales growth. The company’s comparisons to previous quarters start to get more difficult in the fourth quarter of 2015 as Lululemon had a solid quarter during last year’s fourth quarter. The company’s nascent men’s division was among the categories in which Lululemon showed strong growth. Ms. Anderson predicts that growth in the men’s division will start to taper off in 2016.”
It’s time for Lululemon to grow up and get itself sold. The Gap’s (GPS) going to continue to eat their lunch with Athleta and At what price does Nike (NKE) show interest? Personally, I’m more interested in seeing what a VF Corp. (VFC) could do with such a brand.
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