Lululemon cut at Goldman Sachs as 'execution challenges weigh on growth'
Recent issues with execution, lackluster innovation launches, and an increase in regular promotional activities have led to a more balanced risk-reward outlook for Lululemon's stock, according to the bank.
The expectation was that Lululemon could drive a sequential reacceleration in the second half of the year through improvements in its product assortment and innovation pipeline, particularly with new fabric launches in women's leggings. "We have seen limited signs of material innovation as we've moved through the summer, and we were disappointed by the company's launch and quick removal of the new Breezethrough franchise, both of which suggest near-term execution is more choppy than we had initially anticipated."
Store checks and proprietary survey data from HundredX indicate other execution missteps, adding to the cautious outlook. Goldman Sachs states,"We no longer look for a 2H inflection in sales growth and believe the brand is likely more susceptible to competitive pressures and macro factors."
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