Lululemon Stock Analysis (LULU) – The Power of Yoga Pants

Lululemon Stock (LULU) Basic Data, Overview

Lululemon Athletica Inc. (LULU) – hereinafter referred to as Lululemon (LULU) – is a Canadian-based, now global sports and lifestyle apparel company founded in Vancouver in 1998. The company originally started with yoga apparel, and has since expanded its product offerings to include running and training gear, athleisure streetwear, footwear, and accessories such as bags and yoga mats. Lululemon is known for its proprietary, technical fabrics that combine comfort, durability, and style.

The company employs tens of thousands of people worldwide, some estimates put it at around 39, and is currently one of the most well-known players in the athleisure market. Its main competitors include global sports brands such as Nike, Adidas and Under Armour, but it is also increasingly challenged by emerging premium brands such as Alo Yoga and Vuori, which appeal to young consumers with quick style updates and a strong social media presence.

Market capitalization: 20.11 billion USD (2025-09-21)
Investor relations: https://corporate.lululemon.com/investors
iO Charts share subpage: LULU

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📒Table of Contents📒

I have created a table of contents to make it easier for you to navigate the longer articles:

• Lulemon (LULU) Specialties
• How does Lulemon (LULU) make money and what market advantages does it have?
• Lulemon (LULU) metrics
• Lulemon (LULU) Acquisitions
• Lulemon (LULU) management
• Competitors: Lulemon (LULU) opponents
• What risks does Lulemon (LULU) face?
• Lulemon (LULU) valuation
• Major news and the last quarter
• Other interesting facts about Lulemon (LULU)

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〽️Market segment analysis〽️

In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.

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I copied the analysis of the pica segment from the previous Nike Inc. (NKE) article, since Lululemon (LULU) competes with it in the same market segment, but I added a few points with my experience since then. You can find the full stock analysis here: Nike Inc. (NKE) Stock Analysis – Chasing Innovation.

I have quite a lot of personal experience with the clothing market. My father worked in the clothing industry as an engineer, I even disassembled a clothing production line with him, I had countless branded clothes directly from the factory and the difference in quality was relatively small. I had a hard time discovering a durability advantage, the difference between branded and no-name clothes was very often only whether a well-known brand label was placed on it at the end of production or not.

That's why I don't really like the clothing industry, because I think it's a low-value-added business where companies don't really have a technological advantage over their competitors. The problem is that all the clothes are made by the same companies and on the same production lines, with the same technology, typically in the Far East. In contrast, luxury companies, for example, in most cases largely control their own distribution chain, except for wholesale products listed in other stores, but these typically account for a smaller percentage of their turnover, around 15% for Kering and Burberry. You can read more about such companies here:

• Kering Stock Analysis (PPRUY) – Gucci is not selling
• Burberry Stock Analysis (BRBY) – The Knight Does Not Charge

💡But back to the athleisure segment, or sportswear manufacturers. The three largest clothing manufacturing countries are China, Vietnam, and Bangladesh. 

However, consumers need to be convinced somehow why a piece of clothing is different from the others, otherwise it would not be possible to charge a premium for certain brands. Shoe manufacturing is somewhat of an exception to the above, as this is where most innovation is possible.

🚨The entry threshold into the market is low, it doesn't require a large investment, there is no special technology or network effect, the only truly strong competitive advantage can be gained through brand loyalty and brand value. 

This is not really exact, it is difficult to measure, but it should obviously be reflected in the company metrics. The market leader is clearly Nike Inc. (NKE), but the following players are also significant (based on 2024 revenue data):

1. Nike Inc.: $47.82 billion (US)
2. Adidas AG: $24.3 billion (Germany)
3. Lululemon Athletica Inc.: $10.6 billion (US)
4. Puma SE: ~10 billion USD (Germany)
5. Anta Sports Products Limited: ~9.8 billion USD (China)
6. Under Armour Inc.: $5.3 billion (US)
7. ASICS Corporation: ~$4.7 billion (US)
8. Li-Ning Sports Goods Co.,: ~4 billion USD (China)
9. Columbia Sportswear Company: ~$3.4 billion (US)
10. FILA Holdings Corp. (Misto Holdings Corp.): ~3 billion USD (South Korea)

Interestingly, Lululemon (LULU), the yoga pants company, is already in 3rd place, while Chinese companies Anta and Li-Ning are also rapidly rising in terms of revenue, so they may overtake everyone here, just like in the electric car industry. The list is still dominated by American and European companies, but I'll show you another chart that only comes close to the Top 12 in terms of leisure shoes. Why is this interesting? Because shoes are the most profitable segment in the sportswear segment, and here Lululemon (LUL) is not nearly as big as in clothing, as you can see in the picture:

There are also two Chinese manufacturers on the list above, only in 3rd and 8th place, meaning they are brutally advancing. The competition in the entire market is extremely intense, there are many players, the margins are low, and there is a fixed, sunk cost in the production of the product.

Economies of scale are very important, a bit like the retail business, where volume is everything. In light of this, I don't think there is a particularly strong economic advantage for companies in the segment. You can practically exchange one piece of clothing for another at any time, the switching cost is zero.

Nothing proves this better than the fact that everyone has all kinds of clothing brands, not just Nike. However, there are companies that produce specialized products, such as running shoes, that have some technological advantage and produce for a narrower, more knowledgeable community, typically found in the footwear industry. Examples include:

• HOKA One One: $1.8 billion (owned by Deckers Outdoor Corp)
• Mizuno: 1.6 billion USD
• Brooks Sports Inc.: ~$1 billion (owned by Berkshire Hathaway)

A narrow moat, as an economic advantage, can develop due to brand loyalty and the prestige of wearing it. However, this is not a permanent thing, but a periodically changing phenomenon, we call it fashion. That is why I avoid the clothing industry as much as possible, with two exceptions:

• ⚠️in the case of unrealistically low company value, if the company is of good quality (as Lululemon (LULU) currently is)
• ⚠️if it is a market leader brand (see Nike Inc. (NKE))

There are also two characteristics of the clothing industry that clearly show which brands are luxury and which are not. Luxury brands do not have much of an online sales branch, but customers go into boutiques and look at the product, which costs 10,000 USD, such as products from Hermès, Kering or Louis Vuitton. These companies do not have discounts because they do not want to erode brand value with promotions. In many cases, their products are made to order, the number of products produced is low, but the pricing is high. It is important that these do not compete with sportswear manufacturers, but it is worth knowing their characteristics.

In contrast, non-premium brands, typically sportswear or fast fashion brands, such as Vans, North Face and the like, under the umbrella of VF Corp (VFC), carry larger inventories and are very concerned with inventory turnover, which shows how quickly they can sell and re-manufacture their goods. If demand is high, inventory turnover increases; if demand is low, products are put into storage, and then discounts are applied. Low turnover is bad in two ways: price declines result in lost revenue, and storage costs also increase. It's also worth mentioning that price cuts destroy brand value, as why would consumers buy clothes at full price if they can get them cheaper later?

☝️The clothing industry is cyclical, so consumption decreases significantly in a recession, as buying clothes is typically a deferred expense.

The market size is 220 billion USD, while its growth between 2025-2032 is expected to be 4.41% CAGR, which is not a record-breaking value, i.e. it does not even come close to the numbers of the technology market, for example.

COVID has pretty much transformed consumers' shopping and dressing habits, as people don't dress up much when they're at home. That's why they prefer to wear more casual clothes, but it's also true that it almost doesn't matter what they wear at home, which is also called the home office effect. What is certain is that clothing has shifted towards a more casual, sporty direction, which could even be a kind of supportive trend for the sportswear market. The problem is that you can still buy branded products at the thrift store, I have a lot of Nike, Adidas, and Puma products from there, and there are regular discounts, so it's definitely not a company selling premium or luxury products.

🇧🇷Generation Y and Z are also much more environmentally conscious, and since clothing manufacturing is one of the biggest polluters, due to high water consumption, it has become trendy to buy used clothes, which include Nike Inc. (NKE) products.🇧🇷

However, there are supporting trends:

• 📈population growth
• 📈rapid wear and tear of clothing
• 📈the proportion of more casual clothing is increasing at the expense of others
• 📈The expansion of the global middle class and the vanity megatrend
• 📈the rise of a sporty, healthy lifestyle, which supports the sale of sportswear (which suits Lululemon, as it broke into the market with yoga pants)
• 📈📉or the change in fashion trends.

In other words, if I want to, I can see things positively, if I want to, I can see things negatively, there are a lot of things on both sides that you can believe in. The above is true for almost every clothing company, but the market is polarized enough for small, niche segments to emerge where you can thrive. For example, the aforementioned running shoe group, but golf gloves also have their own segment or yoga pants, in which Lululemon (LULU) is strong.

Finally, an interesting fact: Piper Sandler publishes a survey every quarter called TSTW (available here), which provides statistics on the shopping and consumption habits of young Americans.

The chart above shows that well-known, big-name brands are leading the way, like Nike, Adidas, and the like. In other words, it's a global phenomenon, not so much the niche segment whose votes are influential in such surveys, which is why you don't see the names of Lululemon (LULU) or, say, HOKA in such surveys.

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🙋‍♂️Lulemon (LULU) Specialties🙋‍♂️

In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.

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Lulumen Athletica Inc. (LUL) was founded in 1998 by Dennis “Chip” Wilson in Vancouver, making it a Canadian and not an American brand. It originally started as a brand focusing on yoga clothing, but later became one of the pioneers of the entire athleisure (transition between sports and streetwear) category. Lululemon (LULU) was initially a niche manufacturer that was connected to a lifestyle, and it became successful primarily with super comfortable yoga pants made of special materials, especially among women. What was the problem with previous yoga pants? First of all, they were uncomfortable garments made of sweaty nylon, which Lululemon (LULU) reformed, and then as the company grew, the product range expanded with it.

At first, such garments were only worn by users in the gym, but due to cultural changes, they have practically become a fashion item, you can easily meet people wearing yoga pants in the corner store. The basis of this social change is:

• 🤾🏻promoting a sporty lifestyle
• 🤸🏻It's no longer cool to dress sporty, very elegant clothes have started to be replaced by more comfortable clothes
• 🤷🏻‍♂️there is greater acceptance, fewer and fewer people care about "what others think of them", the focus is more on what is good or comfortable for the given individual

https://open.spotify.com/episode/1MKIVkkfvWYXIts9VbzLst?si=520779e34fc24f31

This change gave rise to the athleisure lifestyle, which mixes streetwear with sportiness. Today, you can easily see passersby wearing running shoes, who have made clothes that are basically associated with professional sports a part of their everyday life. However, this would not have been enough for Lululemon (LULU) to achieve such great success, in addition to such margins, as you will see later, other factors also contributed to the company growing to such a size:

• ✨They were in the right place at the right time, when it comes to the yoga market, the company has a kind of “first mover's advantage”
• ✨They worked with extremely good materials, such as technical fabrics, special tailoring and a premium price, which only resonates with a relatively narrow circle
• ✨the very closely monitored distribution network: there are few listed Lululemon (LULU) products in the outlets, they sell their products almost only in their own stores, there are very rare or no discounts

The last point is very similar to what premium and luxury brands do, for example, Kering (PPRUY) and Burberry (BRBY) both sell roughly 85% of their clothing as their own and 15% as listed products. The same is true for Lululemon (LULU):

• 🛍️company-operated stores account for ~45.8% of revenue
• 🛒the company's direct channels, such as online sales, account for ~40.6% of revenue (increased primarily during COVID)
• 🎁the remaining 13.6% includes the proportion of listed products

So Lululemon is essentially on the same level as Kering and Burberry, or even a little better, in terms of control over the distribution network, but they don't manufacture their products, unlike premium and luxury manufacturers, we'll come back to that later. You can find the analysis of the other two companies here, it's worth comparing:

• Burberry Stock Analysis (BRBY) – The Knight Does Not Charge
• Kering Stock Analysis (PPRUY) – Gucci is not selling

Also worth mentioning is Moncler (MY C), which is the puffer jacket company, and very similarly grew out of a single product category, with premium pricing.

💎How premium is Lululemon (LULU)?

There is a very significant difference between premium/luxury industry players and Lululemon's (LULU) distribution network: They do not own the manufacturing site, but work with suppliers from the Far East. Moreover, these are not even exclusive suppliers, but rather the same ones who also serve other sportswear manufacturers.

❗So, unlike premium and higher-end manufacturers, they do not have an impact on all elements of the chain, which is because cost reduction is more important than exclusivity, as they do not have the pricing power to pass this on to consumers.❗

For example, a Gucci customer is willing to pay a premium for a $3000 leather bag that is made locally, using expensive labor, while Lululemon (LULU) customers are not, even though their yoga pants cost significantly more, roughly $150-200, than an anonymous piece.

I should also mention the “We made too much” campaign, under which Lululemon (LULU) discounts its unsold products, but the rate of such sales is decreasing. Lululemon cannot be considered a premium/luxury industry player precisely because it has better pricing power in certain product areas compared to average sports brands (Nike, Adidas, Puma).

Also interesting is Lululemon's (LULU) marketing, which spends about 5% of revenue, compared to 8-13% for its competitors. As a Central European, I first encountered the brand in 2019 on Strava, a sports app, also known as the Facebook for runners. Lululemon targets its target audience very well, mostly targeting those who practice sports at a higher, but not professional, level, rather than running the same ads as its competitors.

😎How has Lululemon (LULU) evolved?

Because Lululemon (LULU) was a hit with its target audience, it entered the US market in 2003 and went public in 2007. The company exploded into the public consciousness so successfully that Lululemon's new products were snapped up as if their releases were red-letter holidays on the calendar. They now have 784 stores in about two dozen countries, but their presence outside the Americas is still limited.

Another interesting thing is that the expansion of categories has not diluted margins, which is also called the vicious circle of premium brands in the retail market. This consists of the following, as perfectly summarized by The Investors Podcast:

• 👍🏻a clothing manufacturer hits a niche market, high margins, premiumization, few products, well-focused product portfolio
• 👍🏻the brand is growing, more and more customers, which leads to the inclusion of new product categories (usually with less pricing power and weaker margins)
• 👉🏻Due to rapid expansion, the company is listing its products in more and more places, which is why control over the sales chain is being diluted, and the company that has previously achieved high margins with specialized products is becoming more and more mainstream.
• 👎🏻overstocking, markdowns, deteriorating exclusivity, emergence of niche competitors, reduction or loss of premiumization
• 👎🏻decline in profits, commercialization

This is roughly what happened to American Eagle (AEO) and Under Armour, which were never able to repeat their previous successes, with their sales and company value collapsing.

👆🏻That said, if Lululemon's products are listed in other stores, they will have to compete with other brands, especially when it comes to shelf space. As a result, they will have to share their profits with the listing company, and the outlet may also discount Lululemon's (LULU) products due to overstocking, which will certainly reduce profitability and destroy the sense of exclusivity.

The big question for me is whether Lululemon (LULU) is on this path. To do this, it's worth learning about the company's past and the crises that have marked Lulu's history.

🧑🏻‍🍼Where did the founder of Lululemon (LULU) go?

Lululemon (LULU) is not a founder-led company, but it once was. Founder Chip Wilson was forced to step down as chairman in 2013 after a series of scandalous statements sparked a major public outcry. The scandal led to pressure from the company's board of directors, which led to him stepping down as chairman in late 2013 and leaving the board in 2015, although he has remained an owner since then due to his stock holdings. The biggest controversy came when he said in an interview:

• “Some women just don’t fit into Lululemon clothes because their thighs touch, which causes problems with the material of the pants.”

This sounded discriminatory and offensive, especially since the company was already struggling with quality issues with its see-through yoga pants at the time. After his statement, the stock price fell from roughly $80 to $40, a roughly -50% drop, consumer boycotts intensified, and the brand's reputation was shaken. The company managed to recover from this in about 2 years.

Then came the 2018 CEO Laurent Potdevin scandal, when the CEO was fired with immediate effect for misconduct stemming from alleged unethical workplace relationships and toxic leadership. The news sent the stock price plummeting from ~160 to ~118 USD, a 27% drop, but the brand recovered relatively quickly from the scandal.

For the sake of completeness, in the current situation, the price has fallen from 508 to 161 USD, which is a 69! percent drop, something that has never happened before in the history of Lululemon (LULU), so the question for me was whether the above is still the case, or whether the company is suffering from some structural problem, or perhaps the market is saturated and this is causing the brand to struggle, we will find out in the following chapters.

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💰How does Lulemon (LULU) make money and what market advantages does it have?💰

In this section, we examine what exactly the company does to generate revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible is it, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.

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Lululemon (LULU) is basically an activewear company that was known for its yoga pants, so women were the main buyers of their products, but on the one hand, their product range is much broader than that, and on the other hand, they have expanded significantly beyond their original Canadian market. This means that Lululemon (LULU)'s largest markets are:

• 🇺🇸USA: 374 stores (+7 stores compared to 2024)
• 🇨🇳China: 151 stores (+24 stores compared to 2024)
• 🇨🇦Canada: 71 stores (unchanged from 2024)

All stores: 784 db (+56 stores compared to 2024)

You can find the full list here: Annual Report 2024. The growth in the number of stores has actually stopped in Europe, and even decreased by one, from 47 to 48, and the same is true for their 4th largest market, Canada, as well as South Korea, Japan, Hong Kong, and Singapore. There are a few countries that stand out from this trend, these are Malaysia, Thailand, and Macau. However, the main driving force was China and Mexico, in the former they opened +24 stores, in the latter 17, but they were not present there until now. What's interesting is that there are Lululemon (LULU) stores in only 23 countries, which is nowhere near the point of claiming to have conquered the entire world. If I take stagnant markets out of the picture and only look at store growth, the order changes like this:

• 🇨🇳China: + 24 stores
• 🇲🇽Mexico: +17 stores (new market)
• 🇺🇸USA: + 7 stores
• 🇹🇭Thailand: + 3 stores

So, it can be seen that the increase in the number of stores is driven by the number of stores opened in China and the new market. Of course, this doesn't tell you how much growth there is in individual stores, how big the store footprint is, or much else, but it does show that Lululemon (LULU) isn't really expanding in its mature markets. But how many stores does Nike (NKE) have as its biggest competitor:

• a total of 6000 pieces, of which
• Operates in a 5000-unit franchise system
• 1032 self-operated stores, but this also includes Converse stores
  • USA: 369 stores
  • Non-US: 663 stores

As you can see, Nike does not own most of its stores, but operates them through a franchise system, but even so, the difference between 6000 and 784 is brutally large, and this does not even include stores selling products listed for other distributors, as the number of stores would certainly jump to tens of thousands. So, I do not think that Lululemon (LULU) has saturated its own market, if I take its entire product range as a basis, including shoes, other clothing and accessories.

🛍️What products does Lululemon (LULU) sell?

Another question is what products Lululemon (LULU) sells, since they no longer only travel in yoga pants:

• 🧘🏻‍♂️Women's yoga wear, the flagship product: leggings (Align, Wunder Train, Wunder Under), sports bras, tops.
• 👨🏻‍🦰Men's clothing: for running and training: lifestyle pants, shorts, tops.
• 👗Other clothing: sweatshirts (Scuba), coats, jackets, loungewear.
• 👟Shoes, from 2022: running shoes, cross-training, lifestyle sneaker.
• 👜Accessories: yoga mats, bags, water bottles, socks, headbands.
• 🛒Digital Services (Lululemon Studio / Mirror): home fitness machine and subscription, but this is less weight.

Also important information is where Lululemon (LULU) earns the majority of its revenue and profits:

• 🤸🏻‍♂️Leggings / yoga wear (women's staples)
  – Price: $90–$120
  – Production cost (material + manufacturing): ~15–25 USD according to industry analysts
  - Gross margin: up to 70–80%
  – This is the goose that lays the golden eggs at Lululemon, it's no coincidence that they're building the brand so much on it.
• 👚Sports bras, tops
  – Price: $40–$80
  – Production cost: ~10–15 USD
  - Margin: 65–75%
• 👘Sweaters, jackets (Scuba, Define, Outerwear)
  – Price: $100–$200
  – Production cost: $25–50
  - Margin: 60–70%
• 👟Shoes
  – Price: $138–$158
  – Production cost: based on industry standards, 30–50 USD (shoes are much more material and logistically expensive than pants)
  - Margin: 55–65%
  – This is much lower than leggings and much closer to the Nike/Adidas margin. So shoes are more of a strategic category (entry point to male customers), not the biggest source of profit.
• 🎒Accessories (mattresses, bags, water bottles)
  – Price: $20–$80
  – Production cost: $5–20
  - Margin: 50–60%
  – Not bad margins, but these are more like additional sales, basket value increases.
• 🖥️Digital service (Mirror, subscription)
  – Here, lower margins could be achieved on hardware and higher (~70–80%) margins on software subscriptions, but this division is loss-making, and Lululemon wrote off most of the Mirror acquisition in 2023, which would have been necessary for this.

🖍️An interesting fact about shoes: This is where sportswear manufacturers make the most money, for example, Nike makes the majority of its profits from shoes. However, Lululemon (LULU)'s shoe margins are nowhere near as high, meaning it's more of a gimmick aimed at men by a brand that traditionally has a female customer base. Another interesting fact is related to women: Most manufacturers of women's shoes assume that women's and men's feet are anatomically similar, with women only wearing smaller shoes than men. This was the “shrink it and pink it” method, which resulted in smaller and more colorful shoes, which is a fundamentally false idea. Lululemon (LULU) was one of the first companies to design shoes specifically for women’s feet.

🗺️Lululemon (LULU) Shoe Design Strategy

• 👟They launched their own shoe portfolio in 2022.
• 👞Their first model, the Blissfeel running shoe, was designed specifically for women: it was built on research based on the shape, movement patterns, and pressure points of women's feet.
• 👟In the communication, they strongly emphasized that this is the first running shoe designed by women for women.
• 👞Later, the range was expanded to include men's models (Chargefeel, Strongfeel), but the initial story was a "specifically female" development.

So, from the above, it can be seen that Lululemon (LULU) was basically focused on women, so much so that until about 2010 the men's department was practically marginal. Since then, this has changed significantly, as currently:

• 👩🏻‍🦳products in the women's category account for 65-70% of revenue,
• 🧑🏻‍🦳Men's products account for ~25% of revenue and are growing much faster than the women's division
• 🛍️Accessories: unisex items, approx. 5-10%, such as shoes, bags and the digital line.

📈Lululemon's growth in summary

Several things are evident from the above: On the one hand, Lululemon (LULU) is trying to appeal to both genders in the long term, which management sees as a major part of its growth. Since the ratio is roughly 2/3 in favor of women, men are not yet buying as many products as the fairer sex, but we don't yet know how much men resonate with the brand.

On the other hand, based on the approximate number of stores they currently have, they can expect most of the growth territorially from the Far East, especially China. How big is this market right now? Some estimates put it at ~$20 billion, which could grow by ~11% over the next five years, as relatively few people spend as much on sportswear as in the US or Europe. In contrast, the global market is roughly $400 billion, with the US alone accounting for roughly $95 billion. However, the sportswear manufacturer has some serious domestic rivals in China, which I will discuss in the “Competitors” section. The company’s executives claim that even in their mature markets, the US and Canada, the brand penetration is only 40%, compared to Nike’s roughly 65%. Lululemon (LULU) may be able to grow further in these markets, but these are clearly not the markets with the greatest potential for traction in the near future.

Calvin McDonalds, 2025Q1

• "Our unaided brand awareness in France, Germany and Japan is in single digits. In China Mainland, it's in mid to high teens. In the UK and Australia, it's in the 20s and in the US, unaided brand awareness is in the 30s."

All growth could still come from expanding the product portfolio, but I think it will primarily come from an increase in the number of products for men. The company needs to be very careful not to sell too many marquee products, as this could damage the company's reputation. Overall, I think the company has not yet reached its full potential, and it is not present in a lot of countries. It is another question how big the viable demand would be there, but countries like Italy, for example, are quite promising, as it is a developed market of 60 million.

🏰Economic moat🏰

In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as the “economic moat,” which deters competitors from besieging the company’s fortress, i.e. its business, and taking its market. In this case, these could be the following:

• 🫸Cost/scale advantage: partly yes. As size increases, the number of units sold increases and the cost per product decreases. Given the size of Lululemon (LULU), which has the third-largest revenue in the world, it should have some competitive advantages, but Nike (NKE) still has four times the revenue. What's surprising is that Lululemon is already significantly larger than Under Armour and American Eagle, for example.
• 🫸Switching cost: none. It's very hard to see in this market why consumers wouldn't switch brands. In fact, everyone has clothes from all kinds of brands and consumers switch them on a daily basis. However, there is still a kind of brand loyalty among consumers, so the main question is, if someone can buy 10 pieces of clothing, how many of them will come from Lululemon?
• 🫸Network effect: yes. Lululemon (LULU) grew out of a kind of subculture, where word of mouth was the first way to spread the brand. Since everyone called Lulu the yoga pants company, it was natural for anyone involved in yoga to look for Lululemon products. So, while it's not a platform business, the products can still spread like a network.
• 🫸Intangible assets, know-how, trademark: yes. Lululemon has registered quite a few trademarks related to its clothing, such as Luon, Nulu, Everlux fabrics, which contain nylon microfibers and are theoretically better than the polyester blends used in the industry. However, this is not processor manufacturing, the bar that has to be jumped by those who want to copy Lululemon's products is much lower. Moreover, in this industry there are many competitors, just to name a few: Alo Yoga, Vuori, Athleta, Fabletics, Beyond Yoga, Sweaty Betty, Outdoor Voices, Gymshark.
• 🫸Barriers to entry: very low. Anyone can make clothing, but it's much harder for manufacturers to achieve a certain level of quality. That's why I don't think consumers will buy Chinese, no-name pants instead of Lululemon (LULU) products. A wide moat is very difficult to justify in this market, for any sportswear company.

In my eyes, Lululemon (LULU) is very similar to Nike (NKE), with the difference that its portfolio is not nearly as global, it does not have as much brand power, but it has so far played in a much more specialized market than the largest American sporting goods manufacturer. I think Lululemon (LULU) deserves a thin moat, but since the sportswear market is relatively easy to enter, I would have a hard time justifying why well-capitalized competitors wouldn't appear, and I don't see the story that the switching cost would be high enough, or even practically zero. However, Lululemon (LULU) is definitely up to something, as it beats its competitors in most metrics, likely due to its very strong customer loyalty and high product quality.

💡This is a very fragmented, multi-player market, it is almost impossible to form monopolies, and fashion can also strongly influence what consumers want, making it more difficult than usual for companies to protect their own market.

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🎢Lulemon (LULU) metrics🎢

In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are extreme – too high debt, high goodwill, etc. - what return on capital the company works with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and how the company uses the cash generated.

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📈What is the S&P 500 yield?📉

Compared to previous analyses, I have introduced a new section to compare the metrics below. Since many people use the US stock market index as a benchmark and also buy S&P 500 ETFs, it is worth looking at what companies are doing in aggregate (obviously, you should be happy if the company you are analyzing outperforms these values).

S&P 500 2024 data:

• SP&500 revenue growth: +7%
• SP&500 profit growth: +10%
• SP&500 gross margin: 45%
• SP&500 net margin: 13%
• SP&500 ROE: 15%
• S&P 500 ROIC: 12%
• S&P 500 ROCE: 11%

Let's start with the usual revenue figures, which are fake in the sense that you're looking at the LTM, or trailing 12-month, return, so it's not entirely comparable to annual revenue due to seasonal effects. Plus, if a company's revenue is declining, it's much better to look at the Q reports and add in the weight of expenses, administrative and other costs, to see how they compare.

The quarterly Lululemon (LULU) data fortunately does not show much different from before, the numbers are moving more or less together. However, the previous year's growth is largely put in parentheses by the fact that the management reduced the previous revenue forecast of 11.15-11.3 billion USD to 10.85-11 billion USD, while the EPS was reduced from ~14.6-14.8 USD to ~12.8-13 USD. If you look at the previous years' revenue and growth, you can see that the previous 10-20% annual growth has become roughly zero, so it is as if the company did nothing for a year, which the market rewarded with an 18% drop in share price.

As for the territorial distribution of revenues, I partially explained this in the previous chapter, but it is good to see them in a graph. The CAGR values ​​are worth looking at, Mexico is a new market, excluding this, the biggest growth comes from China.

The above in a nutshell. As you can see, Lululemon (LULU) is no longer a brand that serves “only” women, the gender distribution is 33-66% in favor of women. The previously mentioned control over the distribution chain is clearly visible, only the revenue indicated by the yellow column comes from the listed products, which is now barely 10%, which is a very good value. The rest of the revenue comes from sales in its own stores and online sales.

Let's look at the margins, which are a bit difficult to interpret if you don't know how the competitors are performing, but I intentionally put them in the Competitors section, not here. Suffice it to say that Nike, which has significantly better metrics than its American and European competitors such as Under Armour, American Eagle, Puma and Adidas, easily bleeds against Lululemon (LULU), so the numbers in the picture are excellent. However, Lulu is not only competing with these companies, but also with local manufacturers in the Chinese market, which provides the highest growth, against which the company is no longer doing so well, see the Competitors section. However, you can't see anything wrong here.

Let's look at the debt, which you can see in the chart below in a quarterly breakdown. The blue bars are negative because the cash balance was higher than the debt, so the net debt became a negative number, which turned positive in the last quarter, from which no long-term conclusions can be drawn, but it is worth describing them item by item:

• 💰income: 10900 million USD
• 🤑profit: 1814 million USD
• 🫰🏼cash: 1984 million USD
• 💸net debt: $607 million (~6% of revenue, ~30% of profit)
• 💶net debt/EBITDA: ~0.2 (in practice zero)
• 👛interest coverage, EBIT/interest: practically infinite

From the above, it can be seen that although the cash balance no longer exceeds the debt, the latter could practically be paid off by Lululemon (LULU), the debt is not significant in practice.

🗃️Lululemon (LULU) Special Metrics

🏷️Inventory turnover rate: It’s worth mentioning two specific metrics that are great for measuring what’s going on at a retail company. I mentioned inventory turnover in previous analyses. This shows how many times Lululemon can replenish its warehouses in a year, or how many times its inventory turns over in its warehouses. Higher is better because it shows that consumers are buying their products in larger quantities. If this slows down, more capital gets stuck in inventory, meaning more and more capital is tied up in warehousing, which is when companies tend to operate with discounts and sell inventory cheaper. You can see this in the image, in orange.

🎰Cash Conversion Cycle: The cash conversion rate is closely related to the previous concept, as it shows how long it takes a company to collect the price of its goods, starting from the moment they are ordered. The faster it is, the faster the inventory turns, because if it runs out, stores have to restock, and the listed inventory is reordered by outlet partners. If this slows down, it usually means something bad, but it could also be because the company is holding more inventory. For example, to protect against supply chain problems, as we saw during COVID. It is usually expressed in days, lower is better, unlike inventory turnover. You can see this in the image above, in blue.

What follows from the above? Lululemon's (LULU) inventory turnover rate has been stagnant since 2022 and its cash conversion cycle has increased, so this is not just a problem of the past few quarters.

🧮What do ROIC and ROCE metrics show?🧮

ROIC – Return on Invested Capital – shows how efficiently the company uses its total invested capital to generate profit. Read more here.

• It shows the company's fundamental value creation capability.
• It filters out the impact of the financing structure.
• If ROIC exceeds the cost of capital (WACC), the company is creating value.

ROCE – Return on Capital Employed – shows how efficiently the company uses its long-term financing sources. Read more here.

• It measures the profitability of business activities.
• It does not take into account tax effects.
• A good basis for comparison between different industry players.

Indicator	What does it measure?	Who is it useful for?	When is it considered good?
ROCE	Total return on capital	Long-term investors	If higher than the industry average
ROIC	Return on invested capital	Equity investors	If higher than WACC
ROE	Return on equity	Shareholders	If stable and sustainably high

Lulemon Athletica (LULU) Ownership Value Creation

On the owner value side, I usually look at what the company uses the free cash generated. Basically, a company can do the following things with cash:

1. put it back into business (this has been happening for years)
2. reduced debt (currently increasing it)
3. pays dividends (does not pay dividends)
4. buys back shares (USD 3 billion worth of shares bought back in the last eight years)
5. acquires other companies (untypical, but it happened, the acquisition of Mirror)

Lululemon (LULU) is not a dividend-paying company, which is a good thing as long as the company can grow and its intrinsic value creation is adequate. This is when growth slows down, but in such cases the price usually follows suit, and the stock will be undervalued in the best case, so it is worth using the remaining cash to buy back shares, as this is then a very value-creating operation. What can be seen in the picture? That in January 2024, shareholder value creation started to rise, as as the price fell, the company bought back more shares. This was slightly worsened by the increase in debt, but the 15.49% value is still brutally high, even the stock compensation does not dampen it much, as it is not a very significant amount.

As the price continued to fall, more and more amounts were allocated for share buybacks at the company, as can be seen from the Tipranks page:

• Jul 31, 2025: $278.54 million buyback.
• Apr 30, 2025: $441.05 million.
• Jan 31, 2025: $332.24 million.
• Oct 31, 2024: $408.51 million.

As you can see, the company has been buying back opportunistically, which is the best evidence of a well-thought-out share buyback policy.

Returning to share buybacks for a moment, in many cases companies use them to mask high executive stock compensation, but this is not the case here, as the former is an order of magnitude higher, so this is also fine in the case of Lululemon (LULU). A counterexample is Veeva Systems (VEEV) and Adobe (ADBE), I also analyzed this stock, you can find it here: Adobe Inc. Stock Analysis (NYSE: ADBE)

Let's move on to value creation, which Lululemon (LULU) is also doing extremely well in, with industry-shattering metrics. As I always say, if ROIC is higher than WACC, the company is creating value. In this case, that's 32.3% > 7-9% WACC, which is a huge positive number and significant value creation.

Overall, the above is very good, but I would like to draw your attention to something: Even when other companies' metrics collapse, the year or a few quarters before the collapse tend to look good. Of course, it's harder to say much from a higher value, but to give examples from within the industry, Burberry's value fell from the 20-30% range to practically zero, as did Kering, but they are not really competitors to Lululemon (LULU), unlike Nike, where a 20-30% ROIC/ROCE drop is also visible.

• Burberry Stock Analysis (BRBY) – The Knight Does Not Charge
• Kering Stock Analysis (PPRUY) – Gucci is not selling
• Nike Inc. (NKE) Stock Analysis – Chasing Innovation

But, as Charlie Munger said: universities should also present the past through case studies rather than providing students with a lot of theoretical education, so it's worth reviewing our previous analyses and learning from them.

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💵Lulemon (LULU) Acquisitions💵

In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.

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Lululemon (LULU) has typically grown organically, with one exception being the 2020 COVID-19 acquisition of Mirror, which was intended to move into the more lucrative services segment in terms of margins and cost of capital. However, that didn't pan out so well:

🛒Lululemon acquisitions

🪞Mirror (2020)

• What did you buy: an American fitness startup founded in 2018 that offered a smart mirror for home workouts. The Mirror was essentially a large, wall-mounted screen/mirror that allowed users to connect to workout classes in real time, such as yoga, strength training, cardio, etc.
  The concept worked as a mirror version of Peloton's home exercise bike.
• How much did you pay for it: the company was acquired by Lululemon for $500 million in cash in June 2020. This was the first major acquisition in the company's history.
• Why did you buy it:
  • During the COVID-19 pandemic, there was a huge demand for home workout solutions.
  • Lululemon saw Mirror as a complement to its wellness and lifestyle portfolio, and an entry into another segment of the fitness market.
  • According to their strategy, in addition to clothing, they wanted to increase revenue through subscription services and training classes.
• What happened in the end?
  • In 2021–2022, demand fell sharply as the pandemic subsided and people returned to the gym.
  • Mirror sales remained weak and the project became massively unprofitable.
  • Lululemon recorded a goodwill write-down of $442 million related to Mirror three years ago.
  • In 2023, it renamed the service Lululemon Studio and sharply scaled back its hardware focus.
  • By 2024, they effectively stopped developing Mirror independently and left the service as an app-based subscription only.

📌What is the lesson from the above: The main thing is that subscription systems initially start a hype train, but after that it died down, there was no real value left in it. The description of 442 million USD shows that 90!% of the amount paid was worth nothing, so this was a very strong owner value-destroying acquisition. It was not worth entering an unknown hardware and software market for Lululemon (LULU), because it burned itself there very easily. What happened to Peloton, which, as a company with a similar profile, reached a market capitalization of 45 billion USD during COVID, at a price of 160 USD? By now, its valuation has fallen to between 1-2 billion USD, which is a decline of more than 90%, so once the temporary effect passed, competitors also acted like Mirror and Lululemon.

💡Lululemon (LULU) has had no other acquisitions in the last 25 years, aside from a few technology and materials collaborations with startups that were into sustainable textiles. So I think they won't have any after that and will stick to organic growth, which I think is the right direction.

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🤵Lulemon (LULU) Management🤵

In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?

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Lululemon (LULU), like any struggling company, has seen some personnel changes. As you can see, aside from the CEO, a significant portion of the management team is relatively fresh. In September 2025, Ranju DAS was appointed CTO, another step in refreshing the management team. Another interesting thing is that 5 new directors have joined the board in the past three years. Other key management members include:

🧑‍💼 Calvin McDonald – CEO (since 2018)

💵 Reward (2024): ~14,6 million USD
📈 Shareholding: ~0.093% ($19.2 million)
📊 Owner expectations: at least five times the annual salary (this refers to the base salary, not the total benefit).
🎯 Note: He has been at the helm of the company for 7.1 years, with base pay accounting for 9.2% of his total salary, while the remaining 91.8% comes from various bonuses. This is roughly in line with similar-sized companies, with the average being $13.5 million, so Calvin is not overpaid. Calvin serves as an independent director at Walt Disney, and was previously CEO of Sephora and Sears Canada. He also serves on the board of directors of Lululemon (LULU).

👩‍💼 Meghan Frank – CFO (since 2020)

💵 Reward (2024): ~4.4 million USD
📈 Shareholding: ~0.0092% ($1.9 million)
📊 Task: Its main tasks are financial stability, cost control, and maintaining forecasts.
🎯 Note: first female CFO at Lululemon, also a vice president of Lulu's board and a member of the board of Best Buy Co.

👩‍💼 Celeste Burgoyne – President, Americas & Global Guest Innovation

💵 Reward (2024): ~5.6 million USD
📈 Shareholding: ~0.011% ($2.3 million)
📊 Task: American market, developing the guest experience, which is a bit elusive for me.
🎯 Note: He has been with the company since 2006, is a key figure in the revival of the stagnant US market, and previously held several positions at the company.

👩‍🎨 Nicole Neuburger – Chief Brand & Product Activation Officer

💵 Reward (2024): ~4.3 million USD
📈 Shareholding: Up to 0.0051%
📊 Task: brand building, product launch strategy.
🎯 Note: He is responsible for corporate image and brand identity. He previously held several positions at the company, including Uber, where he was head of marketing. Before Uber, he was head of Nike's running division for 14 years, so he moved to a competitor within the industry.

🌍 André Maestrini – Deputy Managing Director

💵 Reward (2024): ~4.2 million USD
📈 Shareholding: ~0.008% ($1.7 million)
📊 Task: management of international markets (China, Europe, ROW).
🎯 Note: key player in maintaining +25% growth in China, opening new markets (India, Turkey, Italy). Previously, he was the head of both the Latin American and French branches of Adidas, since 2006, so he has also changed positions within the industry. Within Adidas, he also worked with Reebok. Before Adidas, he was employed by Coca-Cola.

In addition to the above, it is also worth mentioning Martha A. Morfitt, who is the independent chair of the board and owns USD 15.8 million in shares. It’s rare for a company to appoint an independent to head its board, but I take this as a good sign. What bothers me a little is that management doesn’t have a lot of equity in Lululemon (LULU), but this isn’t a family-owned company where the founders are fiercely protective of the company and the voting power is concentrated in their hands. However, former founder Dennis Wilson, aka “Chip” Wilson, still owns $606 million worth of shares, which is ~3% of the company’s value, and the other significant owners are all private equity funds.

You can see the insider sales above, there aren't too many, but it was done by the CEO, Calvin McDonalds, for 6.4 million USD, at a price of 235.69 USD. On the other hand, the positive thing is that several executives in the management came from competitors, so they probably know what they are doing, and it's especially good if you can bring in key people from Nike, Adidas, or direct competitors.

Management remuneration follows the structure mentioned earlier:

• 🤑base salary: 8%
• 🫰🏻bonuses: 32%
• 💰long-term incentives, including:
  • restricted stock units (RSUs),
  • performance-based stock options (PSU): 30% (the manager receives the stock here)
  • stock options: 30% (can be exercised by the manager at a given price)
• 🪙Retirement and healthcare related benefits

Without going into too much detail, the ratios are what matter in the above. For example, the CEO's base salary is $1.3 million, and other bonuses are added to that, making a total of $14.6 million. The other question is what metrics are used to determine the distribution of bonuses, and in the chart above, you can see that the cash bonus:

• 💰net income
• 👛operating income

based on, which are not the two best indicators in the world. But, since this is still only added to the base salary, in the case of the CEO by a maximum of 200%, it is also necessary to look at the terms and conditions of the performance-based stock awards and options, as this accounts for 60% of the total compensation. The PSU is paid based on the following:

• 4-year average based on the CAGR of operating income, minimum payout threshold 5%, maximum payout threshold 15%

The above metric is good for investors because the base against which operating income is compared is constantly growing, as you can see in the image above. As for other benefits, I won't go into them, the point is that there is a mandatory shareholding amount for both the CEO and senior executives, five times the base salary for the former, and three times the base salary for the latter. Finally, let's get another picture of how the total remuneration is made up. If you're interested in more, you can take a look here: proxy statement 2024.

💡Overall, I think executive compensation is in order, with enough safeguards built in by the board to ensure that management and Lululemon's (LULU) long-term goals are aligned.

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🆚Competitors: Lulemon (LULU) opponents🆚

In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are in a subordinate, secondary or superior role. What is their market share and what is their specialty? Are they losing or gaining market share to their competitors?

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Lululemon's (LULU) competitors are relatively easy to find, but I also found a few lesser-known brands, which are both niche manufacturers and Chinese giants that are relatively less present in modern markets but are expanding rapidly in China's domestic market. I'll start with what Lululemon (LULU) is not and who it doesn't compete with: I don't think they really have a common market with premium manufacturers with a lesser reputation. These include Moncler, Burberry, Kering, and all companies that completely separate themselves from Lululemon in terms of product pricing and that are not otherwise characterized by the production of sportswear.

The next category is general sporting goods manufacturers, which include Nike, Adidas, Puma, and smaller brands like Under Armour, American Eagle, and according to Morningstar, Gap, which owns the Athleta brand. I think relatively few people associate the others with anything other than the Nike/Adidas/Puma trio, and the remaining sizes are significantly smaller. I already showed in the Nike analysis how much better their metrics are than Adidas and Puma, so I only put Nike next to Lululemon in the graph below. However, it is worth knowing that almost all manufacturers suffer from macro effects, so you can't accuse the industry of soaring. Lululemon (LULU) beats Nike in every margin indicator, to put it mildly.

If we look at the companies' internal value creation, there isn't much change, the top 3 graphs belong to Lululemon (LULU), and the bottom 3 belong to Nike (NKE)-to. However, don't be fooled, this doesn't mean that Lululemon is a stronger company. It's just that it has better margins and value creation in its own small niche market segment, but Nike is still the more widely known, more capital-rich company. The question is, can Lulu grow to the size of Nike?

I mentioned China earlier, which is no coincidence, as the market of 1.3 billion people has a couple of fairly strong sportswear manufacturers, such as 361 Degree, Xtep, Li-Ning, and especially Anta Sports. I have already mentioned the latter in the Nike analysis, but it is also worth comparing the Chinese competitor, trading under the ticker 2020, with Lululemon. Their metrics practically move together, which suggests the emergence of a very strong competitor in the Chinese domestic market.

Anta Sports is no longer as good as Lululemon (LULU) in terms of value creation metrics, but it still performs well for a sportswear manufacturer. It's fortunate that most Chinese manufacturers are mostly attacking Nike's product range, but in China the Fila brand is owned by Anta Sports, which has yoga wear, leggings, and all kinds of lifestyle products under the Fila Woman brand. Their products can be considered a mix of premium and fashion image, rather than sporty.

All I want to say is that there are quite a few well-capitalized sportswear companies in China that could be eyeing Lululemon's (LULU) market, given its success. However, they also have much smaller, niche counterparts in the US that specifically produce yoga wear. Here are some of them, the main problem with them is that most of them are either unlisted companies or under the umbrella of another brand:

• 🆚Outdoor Voices – a privately held company that has been in financial difficulty several times.
• 🆚Fabletics – originally part of TechStyle Fashion Group, an IPO was considered, but is currently not a publicly traded company.
• 🆚Sweaty Betty – Acquired by Wolverine Worldwide (NYSE: WWW) in 2021. So it is indirectly listed on the stock exchange, but not listed as a separate brand.
• 🆚Vuori – a rapidly growing private brand, IPO plans have been mentioned several times, but it has not happened yet.
• 🆚Gymshark – a British private company, has so far rejected an IPO.
• 🆚Alo Yoga – privately owned by Color Image Apparel (Bella+Canvas, Alo Yoga).
• 🆚Beyond Yoga – Levi Strauss & Co. (NYSE: LEVI) bought it in 2021. So it belongs to a publicly traded parent company.
• 🆚Zella – is a private label of Nordstrom (NYSE: JWN). So it is indirectly a publicly traded company.

To make it easier to analyze them, I tried to filter out their sales revenue, which can be considered a maximum approximate value, since there is no stock market data for all companies:

🆚Lululemon (LULU) niche rivals

Brand / Company	Revenue (around 2024)
Outdoor Voices	~$23 million online; estimated total ~$49 million
Fabletics	~500-900 million USD
prAna	~$113.6 million (2023); other estimates ~$138–157 million
Sweaty Betty	~$64 million online; annual turnover: ~$180–200 million
Mountain	~$259 million online; fast growth; valuation $5500 billion; currently has 93 stores.
athlete	~1400 million USD (2024), approx. 250 stores
gymshark	Exact revenue unknown, valuation: ~1600 million USD
Alo yoga	~250 million USD (2024, est.), they currently have 99 stores.
Beyond Yoga	No public data
Zella (Nordstrom)	No specific brand data
Free People Movement	No public data, but they have 68 stores

Besides Lululemon (LULU), the brands I saw mentioned the most were Vuori, Beyond Yoga, Alo Yoga, and Athleta. I've been on Reddit for quite a while and most people are a fan of Athleta, but CRZ Yoga, Running Bear, and LSDK have also come up. But at least that many people have also said that they've tried everything and ended up going back to Lululemon (LULU) because none of them were that good. The following are some of the beliefs I've developed about the above:

• 🤸🏻‍♂️this is a terribly fragmented market, there are no market leading companies
• 🧘🏻‍♂️people like to try products and therefore switch them up
• 🤸🏻quite a few people end up returning to Lululemon or a brand they believe in
• 🧘🏻There are many cheaper products on the market, but they are not nearly as good, and if the quality improves, the price goes down with it

In the Google Maps image below, you can see what you can see above: Vuori's store opened across from Lululemon's (LULU) store. However, on the other side of the block, there's GAP (GAP) brand, the competitors are opening their stores to each other. Obviously, this is no coincidence, they are trying to suck up each other's sales and revenue.

The most common press story is that Vuori and Alo Yoga are taking over the yoga pants market from Lululemon (LULU) by having a stronger social media presence and targeting a younger audience. That's why I created a table based on consumer reviews to see how the three brands compare.

🔍 Lululemon (LULU) vs. Vuori vs. Alo Yoga — main differences

Characteristic	Lululemon	Mountain	Alo yoga
Position / brand image	Very strong premium athleisure, technical materials, quality, brand value	Lifestyle / comfort / “chill day” style, but with premium pricing	A mix of fashion and yoga, a strong influencer and a Los Angeles lifestyle line
Products	Yoga pants, sports tops, shoes, accessories, technical materials	Jogger pants, sweatshirts, comfortable tops, lifestyle pieces	Yoga clothes, leggings, crop tops, fashionable pieces
Pricing	Tall, leggings ~98-118+ USD	Similar level (Vuori AllTheFeels ~98 USD)	Premium price category, but much more emphasis on fashion and style, not just sports performance
Strengths	A blend of technical material innovation, brand loyalty, performance + lifestyle	Comfort, “soft feel”, strong growth, brand value, sustainability elements (e.g. Climate Neutral)	Great reach with influencer marketing, spectacular fashion partners, trend following
Weaknesses/Risks	Price sensitivity is increasing, competitive pressure, markdowns and inventory problems	May not be performance-oriented enough for those who also do active sports; brand recognition still needs to grow	Similar risk: if fashion trends change or if they compete with less durable pieces due to fluctuating styles

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⚡What are the risks of Lulemon (LULU)?⚡

In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.

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Lululemon (LULU) operates in a very fragmented market, which I think is quite difficult to defend. There are no really large, market-leading companies that have dominated the market, there are a lot of emerging aspirants who are trying to bite off a piece of the market. I have compiled the main risks along these lines:

🏯 Chinese risks

• The Chinese market is one of the most important growth engines, but here the local opponents presence:
  • 👲🏻Anta Sports (FILA China, Descente, Amer Sports portfolio),
  • 👲🏻Li-Ning,
  • 👲🏻Peacebird and other emerging fashion-athleisure brands.
• 👲🏻These have an advantage in the domestic market (better distribution, cultural embeddedness, cheaper production).
• 👲🏻The Chinese consumer is highly price-sensitive, and Western premium brands depend on fashion fluctuations: if Lululemon “goes out of fashion,” demand could drop quickly.
• 👲🏻Political-geopolitical risks (US-China tensions, regulations, import tariffs) also pose a threat.

📌In practice: I work in a place where there are many Chinese partners, so I asked around if they knew the Lululemon (LULU) brand, and what they would recommend instead from the Chinese selection. Quite a few people mentioned the Chinese brands I already listed, and as I gathered from their words, they also have a kind of national pull. This is also clearly visible in the electric car market, which is currently beating other car brands to the punch, and according to some rumors, the next market they will jump on will be the pharmaceutical industry. Considering how much more complex these industries are than the clothing industry, and that most sportswear is already made in the Far East, I can see that if Lululemon (LULU) or any other sportswear manufacturer becomes successful in China, then competitors will grow up to match them very quickly. I see this as a pretty big threat, and I have a hard time arguing why it shouldn't happen: the cost of capital is low, it's easy to enter the market, there are no very strong technological bastions, like in chip manufacturing, and China has a long history in clothing manufacturing.

👗 Changing fashion trends

• 🧘🏻‍♂️Lululemon's strength so far is its yoga pants and athleisure line, but trends in the fashion world change quickly.
• 👖If consumer interest moves in a different direction (e.g. retro sportswear, streetwear, new material innovations), Lululemon could easily lose its current relevance.
• 🤸🏻‍♂️Brands like Alo Yoga (fashion-driven) or Vuori (lifestyle-driven) can follow the new taste faster.

📌In practice: pretty much every apparel company is affected by changing fashion trends. It also occurred to me that the rise of Vuori and Alo Yoga could simply be because Lululemon's (LULU) customers are aging, and the company is finding it harder to appeal to younger generations. Lululemon (LULU) has dominated far fewer sports than Nike, which you can associate with for decades, think of basketball or football, for example.

💰 Brand image risk – excessive commercialization

• 🤑Lululemon was originally an exclusive, insider social brand, but rapid expansion and 700+ stores worldwide are increasingly creating a mass-market impact.
• 💰Excessive store openings, outlet sales, and frequent price reductions can damage the premium image.
• 🪙If consumers feel like Lululemon is just one of many and not special, they may more easily switch to other brands.

📌In practice: There are signs of this, as consumers have started to replace their products with other yoga brands, but I think it's far from over. Most of the world still doesn't know the company, so they still have a lot of room to grow, and I see less risk in Lululemon (LULU) than, say, luxury brands. However, the company has to constantly work to maintain premium pricing, and one poorly executed product series could erode its image.

📉 Economic and demand risks

• 💹Due to premium pricing, Lululemon is highly exposed to economic slowdowns and reduced consumer spending.
• 🌎In the USA, a slowdown in demand is already visible (same-store growth of barely 1%), which indicates that the market is becoming saturated.
• 🤵🏻If the middle class is in trouble, they will sooner give up on $120-180 leggings than on cheaper fast fashion sportswear.

📌In practice: Lululemon (LULU) faces a risk that is quite similar to that of less luxurious companies: expensive yoga pants are typically a product that can be postponed without any particular drawbacks. Since Lululemon (LULU) products are purchased by the middle class, if an economic slowdown, uncertainties, or high inflation develop, the turnover of sportswear can quickly decline. After all, you can do yoga or run in a pair of shorts that cost $20.

🏭 Supply chain and cost risks

• 🏭Most of the materials come from Asia (Vietnam, China, Cambodia), so the company is exposed to customs, import regulations and geopolitical risks.
• 🏤The elimination of duty-free access in the USA caused hundreds of millions of extra costs, direct margin pressure.
• 🚛If shipping, raw material or labor costs continue to increase, Lululemon may be forced to raise prices or reduce margins.

📌In practice: We've seen this before during COVID, when half the world was shut down, and overly long supply chains were disrupted. And Trump says something new about tariffs every day, and sporting goods companies don't really have a choice in where they produce. They simply don't have enough exclusive pricing power to pass on the extra cost of moving production to the US to consumers, so they won't move production lines.

👥 Competition and market fragmentation

• 🔃New players (Vuori, Alo Yoga, Beyond Yoga) are growing dynamically and directly targeting Lululemon customers.
• 👟The big guys (Nike, Adidas) are also strengthening their athleisure line, with massive marketing budgets.
• 👖The small ones (Fabletics, Sweaty Betty, Outdoor Voices) are attacking with other models (membership club, online community).

📌In practice: As I mentioned before, one of the biggest problems with this market is that it is difficult to create a deep moat around the products and the operations of the companies. The competition is extremely high, and the wind changes quickly due to changing fashions.

🧮 Other risks

• 🎁Product innovation pressure: Lululemon has to constantly come up with new materials and styles to keep it from looking outdated.
• 📦Reputational risk: In the past (2013 sheer pants scandal) it was clear that even a poor quality product could cause serious PR damage.
• 🪞Connected fitness failure (Mirror): Future diversification attempts may also fail if they enter foreign territory compared to the basic business model.

📌In practice: The above are actually risks arising from the false functioning of management. Lululemon has so far mostly kept itself ahead of competitors through product development, and in fact, they should continue to do so. What they should refrain from: unnecessary management comments and value-destroying acquisitions, but this is true for pretty much every company.

I made a self-check list that confirms the thesis about the company:

1. low or zero debt: YES/PARTLY/NO
2. significant economic benefit that can be protected in the long term: YES/PART/NOT
3. excellent management: YES/PART/NOT
4. excellent indicators, significant owner value creation: YES/PARTLY/NO
5. The majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PARTLY/NO
6. appropriate assessment: YES/PARTLY/NO

The biggest question regarding Lululemon (LULU) is whether it has a significant economic advantage that can be defended in the long term. I think management also made mistakes when they let competitors come up and weren't aggressive enough with new product launches. And we see what complacency and not resonating with consumers has resulted in with competitors like Under Armour. It's not a big problem yet, but it needs to change urgently.

There's an exercise in psychology called imagination, where you have to imagine something in advance, and you have to play out something similar with Lulu. Where will this company be in 10 or 20 years? Where it appears in theories now, as a prosperous, growing company, or as an Under Armour that has essentially been on the decline for years? It's not an easy question to answer, but I think the former scenario is more likely.

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👛Lulemon (LULU) Valuation👛

In this section, I will examine the company's current valuation compared to historical values ​​and consensus fair values.

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Rating metrics

In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't think these metrics are particularly good - they hide a lot - they can be used as a benchmark.

• Share price (2025-09-21) 169.62 USD; P/E: 11.5; EV/EBITDA: 8.2; P/FCF: 17.2 (Based on Finchat.io)
• Historical median valuation (10-year average): P/E: 41.22; EV/EBITDA: 22.06; P/FCF: 50.06 (Based on Gurufocus)

Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a range can be defined where the current valuation falls.

You should apply a margin of safety to this price range, according to your risk appetite. 

So don't expect an exact price, no one can say this for a stock. However, there are fair value prediction services, almost every major stock screening site has one, I've aggregated them below. However, if you want a good stock support service, subscribe to The Falcon Method (The Falcon Method), entry prices are given for the stocks analyzed there.

Rating (values ​​rounded to the nearest integer)

• 🪙Wall street estimates: 223-479=~351 USD (I took into account the Alphaspread, the average of the two extreme values:)
• 🪙Peter Lynch median P/E: ~$548
• 🪙Morningstar: $295 (5 stars)
• 🪙Gurufocus: ~461 USD
• 🪙AlphaSpread: ~337 USD (50% undervaluation compared to the base case)
• 🪙SimplyWallst: ~256 USD
• 🪙Valueinvesting.io: ~$258

Average (based on 7 reviews): $358 (53% underrated)

How to interpret the numbers? The above “margin of safety” rule should be applied according to your convictions, so if you really believe in the company, you can buy it at fair value, but if you proceed in 10% increments (whose convictions are strong), the math would look like this:

• 💯10% margin of safety: 358*0.9=322 USD
• 💯20% margin of safety: 358*0.8=286 USD
• 💯30% margin of safety: 358*0.7=251 USD
• 💯40% margin of safety: 358*0.6=215 USD
• 💯50% margin of safety: 358*0.5=179 USD

Of course, the list could be continued indefinitely, but the point is that the right purchase price for you is determined by the degree of your conviction.

🧮What is NOPAT Yield?

NOPAT stands for Net Operating Profit After Tax, so one of its biggest advantages is that it filters out distorting accounting items, such as:

• the descriptions: are one-off in nature, often occurring during a crisis (e.g. store closures, inventory write-downs, goodwill impairments). These greatly distort net profit, while not necessarily affecting long-term operations. In the case of Lululemon (LULU), this was the description of the Mirror acquisition.
• depreciation and amortization (D&A): accounting items, not involving cash expenditure, often represent very large amounts (e.g. in the case of goodwill, intellectual property of luxury brands), and do not necessarily reflect actual operating cash flow. Remember the EBITDA indicator? This stands for Earnings Before Interest, Tax, Depreciation and Amortization, so it includes items that NOPAT does not, and also shows a pre-tax situation.
• cash and debt: to calculate the NOPAT yield, you also need the value of the company, which includes the capital from external sources, i.e. debt. This is important because the value of the company is in the numerator, i.e. if the company has no debt adjusted for cash, you will get a higher value for the NOPAT yield, i.e. the company will be cheaper. This is also important because companies burdened with debt not only indirectly degrade the valuation ratio, but also run extra operational risks.

👋🏻The higher the NOPAT yield, the cheaper the company, of course, it is also worth knowing the average NOPAT yield of previous years.👋🏻

In the graph above, you can see that the NOPAT yield has skyrocketed, especially when I tell you what the 10-year average is: 3.19%. The current NOPAT yield for Lululemon (LULU) is 8.57%, meaning the company is incredibly cheap and looks brutally undervalued.

Since Interactive Brokers doesn't release EVA data very recently, I've cut out the gist of the report. In the image on the left, you can see that CVA is the value the company generated on its invested capital, in blue, while the gray represents future expectations. As you can see, virtually zero future expectations WAS priced in in April 2025, and the stock has fallen significantly since then. So, according to the market, Lululemon (LULU) will not grow anything in the future, in fact❗

For those who still don't think that's enough, I've included the target prices estimated by the Stock Analysis analysts. I don't give much thought to what the analysts say. Sometimes it's worth looking at this chart because it clearly shows how much further they think the price can go up and down, so you can see a kind of risk/reward estimate in the picture. The bottom line is that the consensus is that the price won't go below 160 USD, which is also a technical analysis level with strong resistance. I won't go into that, I intentionally don't use technical analysis in my stock analyses, but anyone who wants can look at that picture.

Based on the above, Lululemon (LULU) looks awfully cheap. It's not that the revenue, margin or other numbers have collapsed, it's that the market thinks it will recover. But before everyone gets all optimistic, I've seen many companies that, at one point in time, like the calm before the storm, showed excellent metrics at very low valuations, then the numbers collapsed in a few quarters, and in the end the market was right. However, this has not happened yet and may not happen, while the low exchange rate provides a significant margin of safety.

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🌗Significant news and the last quarter🌗

In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.

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Unlike before, I have included more factual data from Lululemon's (LULU) Q2 report held on 09/04/2025, as there were quite significant management comments, forecast cuts, and the like.

🔢Key numbers from Lululemon's (LULU) Q2 report

• 🤑Total net sales revenue: Increased by 7% (6% at constant exchange rates) to USD 2.5 billion.*
• 🫰🏻Comparable traffic: It increased by 1%.
• 👛American sales: grew by 1% (comparable sales decreased by 3%). US revenue stagnated.
• 💰Chinese revenue: grew by 25% (24% at constant exchange rates), and comparable sales increased by 16% (only applies to mainland China, i.e. excluding Hong Kong, Macau, Taiwan). Revenue from foreign markets increased by 22% overall.
• 🪙Rest of the world revenue: grew by 19% (15% at constant exchange rates), comparable sales increased by 9%.
• 💸Digital channel revenue: It grew by 9%, reaching USD 1 billion (39% of total revenue).
• 💶Gross margin (Q2): 58.5%, which is 110 basis points lower than the previous year, primarily due to higher markdowns and tariff effects.
• 💵Operating result (Q2): USD 524 million, which is 20.7% of net sales.
• (I.e.Diluted earnings per share (Q2): $3.1 (including reinvestment of $0.15 in stock-based compensation).
• 👕Sets: They grew by 21%, reaching USD 1.7 billion (+13% in units), which was also affected by higher tariffs.

*The figures should be understood in comparison to the same quarter of the previous year.

Other important events:

• 💰Revenue forecast cut: For the full fiscal year 2025, Lululemon now expects total net sales of between $10.85 billion and $11 billion, a 2% to 4% increase from last year but a significant cut from its previous revenue forecast of $11.15 billion to $11.3 billion. That doesn't seem like such bad news, but it is, because Lululemon (LULU) has been growing much faster than that so far.
• 👖Product strategy transformation: Lululemon is redesigning its product development practices, increasing the proportion of new styles within the total offering from the current 23% to approximately 35% by spring 2026. This is mainly aimed at refreshing the lounge and social categories, which currently make up 40% of the mix, but consumers are buying these products less and less.
• ⏩Faster time to market: The company is improving its time-to-market process, including accelerated design and better collaboration with suppliers to respond more quickly to demand for high-performing styles. This is actually a wrap on the fact that Lululemon ( LULU ) is growing its inventory too quickly.
• 👨🏻‍⚖️Leadership appointments: Raju Das has been named the new chief technology officer, tasked with accelerating product innovation, increasing agility, and improving personalization. Jonathan Chung, global creative director, leads the design team.
• 🛃Impact of customs duties: The elimination of the exemption and higher duties are expected to have an impact of approximately 220 basis points (≈ USD 240 million) on gross margin in 2025 and a net impact of approximately USD 320 million on operating profit in 2026. Pricing strategy, supply chain improvements and cost control are on the agenda to mitigate this.
• 💫The power of international markets: International regions, especially China (+25% revenue) and the rest of the world (+19% revenue), continue to show strong momentum, with new store openings and market entries (Italy, Turkey, Belgium, planned India). China is expected to grow by approximately 25%, and other markets by 20%.
• ✨US market performance: Although the US business is weak, Lululemon (LULU) continues to gain market share in the “performance apparel” segment, indicating strong brand loyalty for their core sportswear products. The problems are concentrated in the casual lounge and social categories, which I mentioned above. In terms of numbers, this means stagnation, or a 1-2% decline.
• 💁🏻Membership program growth: The membership program has reached approximately 30 million members, indicating strong customer engagement and retention across all age groups.
• 👕Inventory management: Inventory growth is expected to moderate from Q1 2026 on a unit basis, more in line with sales trends.

📌Note: Let's interpret the above. The above report seems perfectly good, at first glance. In fact, management highlighted two things: growth is decreasing significantly, they have practically wasted a year by cutting forecasts. What does this remind you of? For example, Kering, where things have been going similarly for the past 2 years, but the case of VF Corp (VFC) is perhaps even more telling. This is reinforced by the increase in inventory, which resulted in what? The company cannot fully offset multiple price cuts, which destroy the brand's pricing power and premium image, and the restraining effect of prices rising from the bottom due to customs duties.

The lounge and social categories, which represent casual wear, no longer resonate with consumers enough, making it relatively difficult to sell sweaters and the like that cost around $140, see the yoga granny ad above, for example.

From Q2 report:

• "My view now is that we have relied on the same product playbook across certain categories for too long."

This seems like a management mistake to me, the helmsman simply fell asleep at the wheel and let the competitors get up. That's why Lululemon needs to speed up its developments and the launch of new collections, as smaller competitors are eating into Lululemon's (LULU) market share, but it's not yet known how much. However, they are pushing with very cheeky marketing, specifically opening their own stores in Lulu's stores. However, we can say that due to the slowing turnover rate and pressure from competitors, Lululemon had to cut the prices of its products quite drastically, I found a few examples of this:

• 📉slim-fit skirt: from $118 to $74
• 📉running shorts: from $194 to $135
• 📉Windbreaker: from 194 USD to 120 USD

According to some reports, 95% of Lululemon (LULU) stock was previously sold at full price, now it's good to see it at 75%.

As for the market distribution of revenues, they still have quite a lot of “low hanging fruit” in their bag, in addition to the Italian market I mentioned earlier, there is also Turkey with 80 million, Belgium with 12 million and India with a brutally large population. However, the USA is weakening, but this was known before, while China is soaring. What is the conclusion? Lululemon (LULU)'s pricing power is weakening, but there is still plenty of room to increase its market, anything can come of this in the long term, especially if it reverses the previous trend.

Next quarterly report: 2025.12.04.

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✨Other interesting facts about Lulemon (LULU)✨

Everything that was left out of the previous ones, or if there is any special KPI - key performance indicator - or concept that needs to be explained, is included here.

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Lululemon Membership Program: anyone can register, receive notifications about new collections, preferential access to certain products, events. They also have a paid membership, for a monthly fee you get extra benefits, such as exclusive training and wellness content (digital access to videos, classes), invitations to community events, workshops, early access to certain products or limited collections. In fact, Lululemon (LULU) is trying to create a kind of lifestyle platform for its users. In October 2022, they only had 9 million free Essential members, when they introduced the paid Studio membership.

Daydrift: Lululemon Daydrift is one of the brand's newer pants and lifestyle collections, designed specifically for casual, everyday wear - so not as gym or yoga class clothes, but as a "street athleisure" piece.

Lululemon book: Little Black Stretchy Pants is the name of the Lululemon (LULU) company story, written by its founder, Chip Wilson.

🔑Key Performance Indicators (KPIs)🔑

Territorial distribution of revenues: The slowdown in the US market and the growth of the Chinese market are the two most important elements, but it is also worth monitoring how effectively Lululemon (LULU) enters new markets. This not only represents an opportunity, but also risks, for example, it will be a significant cost item for the company.

Warehouse rotation speed: Stockpiling slows down warehouse turnover and usually leads to markdowns. These are relatively easy to find online, so it's worth paying attention to how much Lululemon products are discounted and how the listed products compare to the revenue from online products and Lulu-operated stores.

Details of the contestants: Vuori, Athleta, and Alo Yoga are pushing the market pretty hard and are slowly taking away Lululemon's market share in America. This is definitely worth keeping an eye on, and while exact market share numbers are hard to come by, store count and revenue figures can be a good indicator.

AOV: shows the average order quantity per customer. This can be used to determine whether customers are postponing their purchases or not.

Lulemon (LULU) Summary

Summary of the analysis, drawing lessons.

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Lululemon (LULU) plays football in the very competitive sportswear market, and it seems like the field is not going their way right now. Growth has slowed, competitors have come after them, former consumers are not resonating with their products as they used to. They have been forced to cut their previous forecasts, and there is also some margin squeeze due to tariffs and markdowns. These are usually pretty bad news, but Lululemon (LULU) has such outstanding metrics that it looks like it can weather even this headwind for now. On the bright side, there is growth in foreign markets and a few markets they haven't even entered. Meanwhile, its price has also been beaten to the punch. Despite all the negatives, Lululemon (LULU) still looks very cheap and of good quality.

But, a lot of companies seem to do that before they start to decline rapidly. We've seen a lot of examples of this in the sportswear segment and the premium/luxury industry in the last few years, for example VF Corp (VFC), Nike (NKE), Burberry (BRBY), Circular (KER.PA), these all looked pretty good until a few quarters before they crashed. So it's worth sizing up these companies very carefully and thinking about how much money you want to invest in a segment that is hypercompetitive and where monopolies can't really be formed.

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Frequently Asked Questions (FAQ)

What should you know about a company called Lululemon (LULU)?

Lululemon is a Canadian-based premium sports and lifestyle apparel company known primarily for its yoga pants and women's athleisure products. The company was founded in 1998, has been publicly traded since 2007, and now has over 700 stores globally, with a focus on North America, China, and international growth.

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Who are Lululemon's (LULU) biggest rivals?

Lululemon's biggest rivals include traditional sports brands like Nike and Adidas, as well as direct athleisure competitors like Vuori, Alo Yoga, Athleta (Gap Inc.), Gymshark and Fabletics, which target shoppers looking for a transition between fashion and sports in a similar premium segment.

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Who are the biggest companies selling yoga pants besides Lululemon (LULU)?

In addition to Lululemon, prominent brands in the yoga pants market include Alo Yoga, Beyond Yoga, prAna, Athleta, Sweaty Betty, and Vuori, which are specifically focused on yoga and lifestyle clothing, while Nike and Adidas also sell similar products in large quantities.

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What do you need to know about the athleisure category?

Athleisure is a clothing category that combines the functionality of sports and fitness clothing with casual fashion, so it can be worn in the gym and on the street. This segment has seen explosive growth over the past decade, especially in North America and China, and in the premium segment, Lululemon is one of the most well-known brands.

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In which market is Lululemon (LULU) strongest?

Lululemon's largest market remains the United States, accounting for nearly two-thirds of its revenue, but the strongest growth is in mainland China, where it is achieving 20-25% annual growth, while the rest of the world is also recording double-digit growth.

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How much has Lululemon (LULU) price fallen since its peak?

Lululemon shares peaked at nearly $516 in late 2021, but by fall 2025 the stock had fallen by about 65-70%, signaling weakening investor confidence due to slowing US demand and pressure on margins.

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Which broker should I choose to buy shares?

There are several aspects to consider when choosing a broker - we will write a complete article about this - but I would like to highlight a few that are worth considering:

• size, reliability: The bigger a broker, the safer it is. Those with a banking background – Erste, K&H, Charles Schwab, etc. – are even better, and well-known brokers are typically more reliable.
• expenditures: Brokers operate with various costs, such as the account management fee, the portfolio fee - which is the worst cost -, the purchase/sale fee and the currency exchange cost (if USD is not deposited in the brokerage account)
• Availability of instruments: It doesn't matter which broker has which market available, or whether they add the given instrument upon request and how quickly.
• account type: cash or margin account, the latter can only be used for options. For Hungarian tax residents, having a TBSZ account is important, but citizens of other countries also have special options – such as the American 401K retirement savings account – which are either supported by the broker or not.
• surface: is one of the most underrated aspects, and it can be a real pain. Anyone who had an account with Random Capital, a now-defunct Hungarian broker, knows what it's like to work on a platform left over from the 90s. Erste's system is lousy slow, Interactive Brokers requires a flight test, and LightYear believes in simple but modern solutions.

Based on the above, I recommend the Interactive Brokers account because:

• the world's largest broker with a strong background
• a few million instruments are available on it, and shares listed on multiple markets – e.g. both the original and the ADR – of a single share are often available
• Interactive Brokers a discount broker, they have the lowest prices on the market
• you can link your Wise account to them, from which you can quickly transfer money
• Morningstar's analyses are available for free under the fundamental explorer (good for analysis)
• EVA framework data is available under fundamental explorer (useful for analysis)
• they have both cash and margin accounts, Hungarian citizens can open a TBSZ
• you can use three types of interfaces: there is a web and PC client and a phone application

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Legal and liability statement (aka. disclaimer): My articles contain personal opinions, I write them solely for my own entertainment and that of my readers. The articles published here do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such in the future. What is written here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT in any way considered a guarantee to sell or buy financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.