What to Know Before Buying Lululemon Stock

• Lululemon banal is down 57% this year.

• Consumers successful the U.S. are struggling.

• The company's valuation looks attractive.

• 10 stocks we similar amended than Lululemon Athletica Inc. ›

Lululemon Athletica (NASDAQ: LULU) has been 1 of the best-performing apparel stocks connected the marketplace implicit this century. Since its 2007 IPO, the stock, which is champion known for pioneering the athleisure category, has jumped 1,090%. Those gains were overmuch much awesome earlier the banal tumbled this year, though.

Year-to-date done Nov. 19, the banal was down 57%, making it 1 of the worst performers successful the S&P 500 (SNPINDEX: ^GSPC) this year.

Like different apparel companies and overmuch of the discretionary goods sector, including Deckers, Nike, Target, and Chipotle, Lululemon is seeing a pullback successful request arsenic income successful its halfway North American marketplace person fundamentally flatlined. In the 2nd quarter, comparable income fell 4% successful the Americas, and gross successful the portion was up conscionable 1%.

In summation to the macroeconomic headwinds, absorption besides acknowledged its ain deficiency of execution arsenic it failed to support merchandise caller and successful banal successful circumstantial categories, starring to weaker sales.

It was besides forced to slash its guidance for the twelvemonth owed to the nonaccomplishment of the de minimis exemption, which had allowed shipments of little than $800 to beryllium imported into the U.S. without paying tariffs.

As a effect of those setbacks, the banal has dropped sharply, but is this a buying accidental oregon a motion of things to come? Let's instrumentality a look astatine 3 things you should cognize earlier buying Lululemon stock.

CEO Calvin McDonald acknowledged the challenges the institution is facing, arsenic good arsenic its ain errors. He said, "Our lounge and societal merchandise offerings person go stale and person not been resonating with guests," and that the institution relied connected the aforesaid merchandise playbook successful definite categories for excessively long.

In bid to hole these problems, the institution plans to velocity up its go-to-market process to trial caller styles, expanding the fig and frequence of caller styles. Specifically, it's aiming to summation the percent of caller styles successful its assortment from 23% to 35% by adjacent spring, and volition measurement lawsuit behaviour to the alteration and respond accordingly.

Additionally, the institution has improved its fast-track plan capabilities, reducing pb times by respective months for immoderate products, and expects those to statesman to person an interaction starting aboriginal adjacent year.

It's excessively soon to accidental if that's capable to crook Lululemon's performance, but investors should beryllium encouraged by management's diagnosis and its speedy action.