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Is Lululemon Still a Growth Story? $LULU

October 18, 2021

Is Lululemon Still a Growth Story? $LULU

Lululemon is the dominant player in high-quality Athleisure. When we examine total mention volume for major players in the pure "athleisure space" like Gap's Athleta and American Eagle's Aerie brand, Lululemon holds more than 80% of Total Mention volume.

And consider this: Lululemon's trailing 12-month sales totaled $5.5 billion -- or ~3% of the global sports and fitness clothing market.
LULU shares have gained more than +608% in value in the last 5 years. Naturally, the street is wondering: Is Lululemon still a growth story?

LikeFolio data provides insights into 4 key factors for continued audience expansion:

1. Consumer Happiness
This metric may be the most predictive long-term indicator of customer retention and the attraction of new customers.

Lululemon's sentiment is consistently above 74% positive, placing it in the upper echelon of performance apparel and 10 points higher vs. Nike.

Its high-quality products do give the company a leg up in pricing power.

2. Digital Demand

In 20Q2, digital sales increased by +157% YoY. In 21Q2, digital sales increased an additional +4% -- Insane traction.

LikeFolio data confirms stickiness in eCommerce channels. Mentions remain significantly higher vs. 2019 levels and have increased +7% QoQ.

3. New Audience Segments: Men
One key segment Lululemon hopes to continue growing is menswear...The company noted a slowdown in men's growth during COVID, when most shopping shifted online.
With the return of in-person shopping, are LULU men's sales returning?

LikeFolio data suggests relative flatness here. Mentions are +4% vs. 2019, but -10% YoY and -7% on a QoQ basis.

4. New Services: Home Fitness

Lululemon's Mirror acquisition in 2020 tapped into a growing workout-from-home trend.

Sales from this segment currently represent less than 5% of Lululemon's total sales...but this could grow. The company has MIRROR shop-in-shops in 150 Lululemon stores, with 200 shops expected in time for the holiday season.

LikeFolio data shows little traction here, with mention volume falling -19% on a QoQ. We will monitor this closely through the end of year.

All in all, LikeFolio data shows that Lululemon's performance is almost exactly in-line with the Street's expectations. If Earnings were this week, the company's score would be exactly neutral: 0.

Keep an eye on this name as Holiday shopping starts to pick up in Q4...

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LikeFolio analyzes social media data to accurately predict shifts in consumer behavior. We sell data and insights to professional investors, corporate research teams, and software providers.

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