LULU at 9x PE

It needs to stop chasing Nike and return to its roots by becoming Alo/Vuori

To understand Lululemon, one must detach themselves from all that is corporate and touch the “soul” of what it means to be athleisure.

LULU’s problem is one that has plagued retail brands across time — it has become Big Corporate. What was once a homely, beloved brand that energized the souls of its customers has become a hunking, monolithic machine, slowly being crushed under the weight of shareholder expectations and profit updates. In its search for greater scale, it has lost its way from the cool, innovative, founder-led spirit that made it into what it is today and turned into just another silent, uninspiring machine that reliably churns out profits but is gradually losing its meaning amongst those who first fell in love with it. In the process, Lulu echoes its dying throes from the void of irrelevance as customers slowly fall out of love with it.

But there is a remedy, and fortunately for shareholders, the medicine is highly recognizable. Lululemon just needs to become what it fears most — Alo & Vuori. Far from just churning out sweatpants, Lulu needs to recover the stature of its brand to what it lost a long time ago and is now being represented by its closest competitors — the cool, Grease Lightning factor that embodies relevance in an age where stale, replicable fast fashion has become the norm. The lighthouse is clearly visible, and Lulu simply needs to chart its course to collide with what Alo & Vuori are already doing so well — connect with influencers, sponsor athleisure events, revive that grassroots spirit which makes a brand feel alive. This is not something you can map out on a spreadsheet — it’s subjective, fun, almost human in its composition, but it’s exactly the medicine that Lululemon needs.

In analyzing Lululemon, it is tempting to simply analyze it as a business and determine the operational levers that ticks its boxes. However, what Lululemon needs is a brand overhaul, more specifically, to rediscover what it had lost and what its closest competitors are now doing so well with. This “spark” is much more subjective, but ever so important to understand in order to solve the jigsaw of what is necessary to revive the Lululemon brand. In this vein, this article will help you understand not just what LULU is as a business, but even more what the shot in its arm needs to look like to bring the brand back to its roots.

The Need for a Brand Overhaul

As a retail brand operating in the athleisure category, Lululemon doesn’t exist in a vacuum. It faces extensive competition from two of its main competitors in the leggings and sweatpants world — Alo and Vuori. If you analyze their products from the bottom-up by watching organic product reviews on Youtube and Tiktok, you can get a sense of who the target customer is and what makes them come back for more.