Jefferies analyst Randal Konik maintained a Sell rating on Lululemon Athletica (LULU – Research Report) today and set a price target of $220.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Randal Konik has given his Sell rating due to a combination of factors impacting Lululemon Athletica’s performance. The company’s sales growth is anticipated to be the slowest in its history by 2025, with the North American market, which constitutes a significant portion of its business, showing signs of deceleration. Additionally, increased competition is eroding Lululemon’s market share, as rivals expand their store presence and enhance brand recognition.
Another concern is the company’s product strategy, which involves diversifying beyond its core offerings. This shift has not been well-received, leading to lower customer conversion rates. Furthermore, rising inventory levels are expected to result in increased markdowns and pressure on gross margins. The growing reliance on outlet stores, which have increased by 40% over the past four years, is also seen as detrimental to the brand’s long-term equity and pricing power.