Lululemon Could Be Next Under Armour, Jefferies Says

Jefferies says data shows Lululemon’s brand strength waning and competition rising which should slow growth and pressure margins and earnings. The analysts say in a research note that the company is facing some of the issues that caused the downfall of Under Armour. They believe Lululemon is losing incremental share to Alo Yoga and Vuori, that fashion in bottoms is shifting to wide-leg and that the entrance into the Mirror business and footwear sector were mistakes. The result, according to the analysts, is that Lululemon’s total sales growth average, which was greater than 30% over the last 12 quarters, is now about 10%. Jefferies, with an underperform rating on the stock, lowers the price target to $240 from $300. Shares are down 2.5% to $364.82.

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