Thomas Richmond
4 min read
Quick Read
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Jim Cramer declared LULU a ‘thoroughly broken stock,’ down 52% year to date and 77% over five years, with no compelling reason to buy.
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Lululemon’s next-quarter guidance projects revenue declining 10-11% with EPS of 93-98 cents, versus $2.59 earned a year ago.
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Women’s leggings sales dropped roughly 20% in Q2 as Alo Yoga, Vuori, and Fabletics fracture the athleisure market Lululemon once owned.
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Jim Cramer delivered a blunt verdict for Lululemon (NASDAQ:LULU) on his September 10 Mad Money segment, saying: “In less than three years, Lululemon has gone from one of the greatest growth stories ever told to a thoroughly broken stock.“
Shares closed at $98.97 on Friday, and while the stock actually rose 2.16% in the session, $LULU is down 52.48% year to date and 76.79% over five years.
Jim Cramer took a tough stance on Lululemon in the segment: “I can’t give you a good reason to buy Lululemon even after these stunning declines. The athleisure category remains in the doghouse, and the competition is as crowded as ever, slashing price-cutting margins.”
Cramer Calls Lululemon a “Thoroughly Broken Stock”
Cramer framed the current athleisure landscape as unrecognizable from a few years ago: “The athleisure category has become viciously competitive. Ten years ago there was Lululemon and not much else. Now they’re up against Alo Yoga and Vuori. On the high end, Athleta; many other brands like Fabletics coming from the low end.”
Cramer believes the athleisure category is fragmenting, meaning legacy giants like Lululemon are giving market share away to up-and-comers.
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Cramer also referenced a Texas forever-chemicals investigation, a founder-led proxy fight, and a China yoga-festival drum controversy as pressure points on the brand. Management discussed on the Q2 earnings call that guests are seeking “away-from-body” styles and that women’s leggings sales fell approximately 20% in Q2.
