Core Viewpoint - Lululemon's Q2 earnings report was disappointing, leading Baird to downgrade its rating from "Buy" to "Neutral" and reduce the target price by 13% to $195, citing increased short-term earnings uncertainty overshadowing attractive valuation levels [1][4] Group 1: Financial Performance and Analyst Ratings - Baird analyst Mark Altschwager noted that Lululemon's recent product launches may struggle to attract high-value core customers, compounded by signs of consumer weakness in the Canadian market [1] - As of September 19, the discount items in Lululemon's "We Did Too Much" section increased by 77% compared to a year ago, marking the highest level in at least two years [1] - Following the downgrade, only 8 out of 34 analysts tracked by FactSet maintained a "Buy" rating, a reduction of 50% since the end of August; the average target price dropped by 31% to $187.65 over three weeks, indicating a significant shift in market sentiment [4] Group 2: Competitive Landscape - Nike's recent collaboration with SKIMS is expected to pose a direct competitive threat to Lululemon, as the new sportswear line targets the same consumer demographic [5][6] - The partnership leverages Kim Kardashian's influence and SKIMS' digital community, potentially disrupting the high-end sportswear market and creating significant pricing competition for Lululemon [6] - Despite the potential for Nike to capture market share, it remains to be seen if the collaboration can convert brand influence into sustained credibility in the sportswear sector, particularly among Nike's traditional loyal customers [7]