Lululemon Athletica is grappling with slowing sales and a recent leadership change as the producer price index rose 6.5% year over year in May, the highest increase since 2022. The company's constant-currency revenue grew just 2% last quarter, a sharp deceleration from 18% growth in mid-2023, while comparable sales fell 2% and gross margin dropped over four percentage points to 54.2%. Full-year guidance was lowered, with revenue now expected to decline slightly. Former CEO Calvin McDonald departed in January, and incoming CEO Heidi O'Neill, a 25-year Nike veteran, will not start until September 8, 2026, leaving a leadership gap. International revenue rose 22%, but the American segment declined 4% amid negative brand sentiment. The stock trades at 11 times forward earnings, but the author cautions it could be a value trap given product strategy uncertainty and inflation headwinds.
Lululemon Athletica Inc.Sales slowdown with 2% constant-currency revenue growth, comparable sales down 2%, and lowered full-year guidance
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