TD Cowen Flags 250 Basis Point Margin Risk for Lululemon Athletica (LULU)

Core Viewpoint - Lululemon Athletica Inc. is experiencing significant changes in its e-commerce operations due to regulatory shifts, impacting its financial outlook and stock valuation [1][2]. Group 1: Financial Impact - TD Cowen has reduced its price target for Lululemon from $298 to $220 while maintaining a Buy rating, influenced by the company's reliance on Canadian e-commerce orders [1]. - Approximately 66% of Lululemon's e-commerce orders in the U.S. were fulfilled via Canada, which previously provided a financial advantage through the de minimis loophole [1][2]. - This reliance on Canadian fulfillment contributed an estimated 250 basis points of unsustainable annual benefit to Lululemon's gross margin [2]. Group 2: Company Overview - Lululemon Athletica Inc., founded in 1998, specializes in designing, developing, and distributing a range of sportswear, accessories, and footwear [3].