Quartz points out (via Racked) that while the company’s sales are still growing, it could be due to their increase in clearance items — a sales strategy the brand rarely used in the past. FBR & Co. analyst Susan Anderson estimates there are almost double the amount of clearance racks inside stores than last year, and sees similar activity occurring online. Anderson slashed her rating of Lululemon from “market perform” to “underperform,” and lowered the price target to $42.
While Lululemon has faced controversy in the past due to quality issues and loud-mouthed CEOs, their current problem appears to lie in the oversaturated activewear market. “Given increasing competition in women activewear and a competitive men’s market, we think that LULU may not be able to claw back margin with higher selling prices on product,” Anderson wrote.
In recent years, many brands such as H&M, Uniqlo and Urban Outfitters have all launched their own workout lines. Celebrities have also jumped on the athleisure bandwagon, including Carrie Underwood, Kate Hudson and most recently, Jessica Simpson. And then there’s Beyonce, who is teaming up with Topshop to release an athletic fashion line in April 2016.
It was nice knowing ya, Lululemon.
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