lululemon(US:LULU) CNBC Television·2025-09-04 22:27Financial Performance & Guidance - Lululemon missed revenue estimates, and same-store sales and full-year guidance also came in below expectations [1] - The company needs to confess that their earnings guidance was not lowered enough [2][3] - The company is trying to get the market focused on next year, but analysts believe they will have declining growth due to competition [4] - Lululemon's stock will not bottom until the company confesses to their sins of earnings power being much lower than it is today [5] Operational Challenges - Lululemon's sales per square foot is $1,550, which is four times the mall average, and operating margins are over 20%, which is well above peers, but these metrics are starting to decline [6][7] - Lululemon's capital expenditure as a percentage of sales is the highest in the sector, and they are opening stores at a double-digit clip on a square footage basis, adding fixed cost expense and compressing margins [8][10] - The company needs to shut store growth, which may need to wait until 2026 due to existing commitments [11][12] Market & Competitive Landscape - Lululemon's July sales were the worst of the quarter, while the industry had its best sales trends, indicating a loss of market share [9] - The athletic apparel market is experiencing a hangover from the COVID-19 pandemic, and fashion shifts are occurring, with denim becoming a bigger trend [14][15] - People are not looking like they're going to the gym 24 hours a day, which is a problem for Lululemon, which has depended on the athletic look for years [15][16] - Lululemon has tried to change into the Gap, which is a key issue for the company [12]