INVESTMENT THESIS · ISSUE 003· LULU · October 23, 2026 · Close before the results (October 23): $100.28
Imagine a fairly popular clothing shop on your high street. For years it’s been selling more clothes, opening more stores and making more money. Then the regulars start to visit less and less. The owner then goes on to introduce new ranges and spend more on advertising. Sales continue to fall.
Would you buy the shop at half its old asking price?
You wouldn’t answer straight away. You’d first want to know how much the shop is currently earning. You’d want to establish whether the customers have simply changed their habits over the last few months or whether they’ve in fact found somewhere else to spend their money. You’d also look at the tenancies. A quiet shop still has to pay rent.
That’s the Lululemon question. They’re a premium athleisure brand selling their stuff via their own stores and their website. Earlier this year two of the execs put their own money into the stock (a total of about $2m at prices between $164 and $117) and today the shares are trading at $104.06.
On last year’s earnings that’s only about 8x. Looks like a bargain.
Then we took one item out of the most recent quarter and the picture changed. Which item was that and how much did it actually matter?
Subscribe free to keep reading. Next: the item in the latest quarter, what the leaders and the big funds actually did with their money, how much cash the company actually holds and the price at which we’d look at it more closely.