The Intrinsic Value Podcast - The Investor’s Podcast Network

TIVP033: Lululemon (LULU): Still the King of Athleisure? w/ Shawn O’Malley & Daniel Mahncke

16 snips
Aug 17, 2025
Dive into the world of Lululemon, the athleisure giant with a cult-like following. Discover why their direct-to-consumer model sets them apart and how they maintain impressive sales without heavy discounting. Explore the challenges faced from new competitors and the impact of international markets, especially China. Uncover the cautionary tale of their failed acquisition of Mirror and the complexities of cash management amidst rising inventory levels. Is Lululemon still a worthy investment? Tune in to find out!
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INSIGHT

Quality Business, Depressed Valuation

  • Lululemon combines strong growth, high margins, and high ROIC yet trades at a depressed P/E near 15x.
  • Market sentiment swung from exuberance to excessive pessimism after modest slowdown and tariff headwinds.
ANECDOTE

Origins And Scale Of The Brand

  • Lululemon started in 1998 in Vancouver and popularized flat-seam yoga pants that drove athleisure mainstream.
  • The brand now runs 760+ stores and about half of sales come from e-commerce.
INSIGHT

Exceptional Margin Profile

  • Lululemon has industry-leading gross margins near 58% and operating margins far above peers.
  • Pricing power and operating leverage underpin exceptional profitability versus competitors like Nike.
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