Jefferies store checks find ‘flaws’ in Lululemon merchandising

Jefferies analyst Randal Konik says the firm’s latest store checks show the "flaws" in Lululemon’s merchandise strategy. The checks show Lululemon’s promotional activity remains elevated, says the analyst. The firm sees heightened category expansion risk with "heavy" markdowns in outerwear and light traffic in the footwear section of Lululemon stores. In addition, the belt bag fad has peaked and Lululemon is adding new colors and bigger logos to drum up demand, the analyst tells investors in a research note. The firm reiterates an Underperform rating on Lululemon with a $200 price target.