QSQuantSignals Research/Scion Template
Try FST free

QS Research · Michael Burry's Scion Capital analyst template · 2006

lululemon athletica inc. (LULU)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: WATCH

Conviction low · base case +21% · downside -29% · upside +107%

At $109.86, LULU trades at 4.1x TTM EV/EBITDA and 8.2x TTM P/E (N26, N28) with $1.39B net cash (N20), but TTM EBITDA $2.52B (N14) includes a $134.5M non-recurring tariff refund and FY2026 guidance points to revenue down 5-7% and EPS of $9.48-9.73 (S98). My base case applies a still-discounted but more conservative 5.0x EV/EBITDA to TTM EBITDA $2.52B: EV $12.60B + cash $1.39B = $13.99B / 105.59M shares = $132.5, or +20.6% from $109.86. The downside case at 2.7x EV/EBITDA is $77.6 (-29.0%) and the upside case at 9.0x is $227.9 (+107.5%), giving a favorable skew, but the base case is below the +30% long threshold and the downside is worse than -25%, so the strict rule says watch, not long. The market may be missing the cheap valuation and international growth, but North American deterioration and one-off distortions prevent high conviction.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    lululemon athletica inc. is principally a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. In FY2025 (ended February 1, 2026) it generated $11.10 billion revenue, with 63% women's, 24% men's, and 13% accessories/other; it operates three segments—Americas (71% of revenue), China Mainland (16%), and Rest of World (13%)—through an omni-channel model of company-operated stores, e-commerce, and other channels. Company-operated stores totaled 811 at February 1, 2026, up from 521 at January 31, 2021, and sales per square foot were $1,426 in FY2025 versus $1,574 in FY2024. Since the oldest annual report provided (FY2020), the business added footwear, expanded from 17 to 30 countries, and shifted from two channels (stores and direct-to-consumer) to regional segments and omni-channel capabilities.

  2. ✓ 2. Competitive advantage

    The 10-K states lululemon competes on premium brand image, technical product innovation, quality, and a vertical retail/community model it believes differentiates it. Financials from S27 show scale: revenue reached $11.10B in FY2026, but operating income fell from $2.51B in FY2025 to $2.21B, and sales per square foot declined to $1,426 from $1,574. Competition is highly competitive with increasing established and new entrants. Supply chain concentration and no long-term contracts are additional risks.

  3. ✓ 3. 10-Q takeaways

    Q2 2026 net revenue fell 4% to $2.4bn with comparable sales down 9% (10% constant dollar), led by Americas down 12%. Gross margin rose to 60.5% only because of a $134.5m IEEPA tariff refund; excluding that one-off, underlying product margin weakened and operating margin fell to 18.8%. SG&A deleveraged 400bps and net income fell 11% to $329.2m. Operating cash flow improved sharply, but no quantitative guidance is given and tariff, brand, and competition risks remain.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

Sign in free to QS Research to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.