The Compound
What's Going on With Lululemon?
10/29/2025, 8:54:27 PM
Economic Summary
- Competition from low-cost retailers like Costco (COST) is pressuring premium apparel brands such as Lululemon (LULU), forcing potential re-pricing or repositioning decisions that could compress margins.
- Management effectiveness matters materially: the speaker argues Lululemon's leadership has not adapted to changing retail dynamics, implying strategic failures may have direct negative effects on market valuation (LULU).
Bullish
- Some stakeholders express personal support for CEO Calvin McDonald.
- Costco's value pricing continues to attract customers and drive its retail model.
Bearish
- Lululemon faces erosion of pricing power as Costco sells visually similar lower-cost alternatives.
- Management under CEO Calvin McDonald hasn't sufficiently reinvented strategy to counter low-end competition.
Bullish tickers
COST
Bearish tickers
LULU
LULU
1 price targets
350
Bullish
CEO Calvin McDonald has supporters and brand recognition remains strong, offering a potential base for a turnaround if strategy shifts.
Bearish
Competition from Costco's lower-priced, similar-looking products and perceived failure to reinvent under current management threaten pricing power and growth.
COST
Bullish
Costco's low-price, high-value merchandising undermines premium competitors and continues to attract cost-conscious consumers.
People mentioned
Calvin McDonaldRichard Glancy