And the footwear brand isn’t substantial enough either, she argued, representing “well under 5% of sales.”
The Mirror has been “a failure,” according to Sherman, who pointed to the product's negative margins. Footwear and the company’s at-home workout product, the Studio Mirror, have been popular points of discussion. REUTERS/Carlos OsorioĪfter the explosion of Lululemon’s men’s apparel, the analyst added, a meaningful large new catalyst is unlikely to emerge. “Should LULU be expected to grow at 2x sector growth when comping against five years of turbo-charged growth, with a more cautious consumer into 2023, and more competition from similar, newer athleisure brands nipping at LULU’s heels? It’s possible but it’s certainly not a lowball target.”Īthletes reveal lululemon athletica's Team Canada uniforms for the Beijing 2022 Winter Olympics, in Toronto, Ontario, Canada October 26, 2021. “Bulls believe this to be a lowball that will easily be beaten, but we don’t quite agree,” Sherman wrote. This came roughly a month after the company’s third-quarter earnings sent the stock tumbling more than 12% after missing Street expectations on gross margins.Ĭonsequently, Bernstein is projecting 13% year-over-year revenue growth in 2023 for Lululemon stock, which would be in line with management's projections of reaching $12.5 billion yearly revenue in 2026.
Earlier this month, the retailer warned its fourth-quarter margins will likely shrink on a yearly basis. However, she added, signs of a reset have already begun. According to Sherman, the elevated expectations stemmed from Lululemon's successful digital initiative, the rise in athleisure throughout the height of the pandemic, and the return-to-office wave - all of which pushed the stock higher over the past several years as the company produced a 25% compound annual growth rate.
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