Lululemon yesterday informed members of its Sweat Collective discount program that their 25% discount will only apply to regular-priced products starting April 24, Jefferies analyst Randal Konik the analyst tells investors in a research note. When combined with elevated promotional activity in January, slowing web traffic, and a fading belt bag trend, the move signals that Lululemon is facing an issue of rising markdowns, increased mix of promotional selling, and potentially gross margin pressure as a result, the analyst tells investors in a research note. The firm reiterates an Underperform rating on the shares with a $200 price target. It says that with promotions "getting even worse" through January, there could be further downside risk to Lululemon’s gross margin expectations.
Published first on TheFly
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