LULU: "Next Under Armour" as Lululemon Forecasts Revenue Deceleration

(NASDAQ:LULU) Lululemon FY23 Results

Lululemon Athletica

Weighting as of writing: 3%

23rd April 2024 - FY23 Results

On March 21st, Lululemon reported FY23 results. All things considered, the results were good. Guidance, however, caused some upset. Lululemon shares are down ~29% this year; after being down just 6% before the report, and is currently the 8th worst-performing stock in the S&P 500. Lululemon’s implied 11.5% revenue growth for 2024 is a notable deceleration from years prior; having averaged an annual revenue growth rate of 24.4% over the last 5 years. This year’s revenue guidance is closer to, but still behind, the 5 years before that; where Lululemon averaged 15.7% annual revenue growth.

A report1 from Jefferies concluded that Lululemon “could be the next under armour”. The report cites competition from rival premium athleisure brands such as Alo and Vuori, fashion shifting to “wide-leg” pants which are not Lululemon’s fotre2, the wasteful capital allocation of Mirror hardware and entering the footwear market as