Key insights
- The author suggests Lululemon's stock is depressed due to CEO dissatisfaction and a founder/board conflict. Resolution could push the stock to $170-180. Further gains to $250 require renewed North American growth, as China and international markets are performing well. This suggests a potential upside if internal issues are resolved and North American sales rebound.
I think for a couple of years LULU’s bottom has been a frequent topic of discussion on here as the stock has continued its decline despite a very solid balance sheet.
Of course, if the brand is dying and people don’t want to wear Lululemon anymore then the current balance sheet is pretty irrelevant as it would eventually collapse.
Still, it seems to me that there are TWO major reasons why the stock is currently trading for $135 ish and not in the $170-180 range. CEO dissatisfaction and founder vs board proxy battle.
If they sort their quarrels out I’m sure the stock will go right back to $170-180. To get substantially higher than that let’s say $250 they would need to show growth in North America again.
China and International are doing very well. North America has stalled.
Thoughts?