4. Lululemon Athletica Inc. (NASDAQ:LULU)
Average Price Target Upside as of August 5: 54.24%
Number of Hedge Fund Holders: 51
Lululemon Athletica Inc. (NASDAQ:LULU) is a distributor and retailer of luxury athletic apparel, footwear, and accessories through the Lululemon brand for women and men. The company has more than 711 retail stores worldwide, with a significant footprint in North America and a growing international presence in markets like the UK, Germany, China, and Australia. The company operates through brick-and-mortar stores, which serve as community hubs, and its e-commerce platform allows customers to shop the brand’s full product range online.
Among 38 analysts that have covered Lululemon Athletica (NASDAQ:LULU), the average price target of $360.00 represents an upside of 54.24% to the current stock price, as of August 5. Furthermore, the stock was held by 51 hedge funds in the first quarter and the stakes amounted to $843 million. GLG Partners is the top shareholder of the company and has a position worth $182.88 million as of Q1.
Lululemon (NASDAQ:LULU) presents a compelling case for investment driven by its steady growth trajectory and strong market position. The company’s expansion strategy remains focused and effective, as can be seen by its consistent store openings and geographical diversification.
As of the first quarter, Lululemon operates 711 stores worldwide, which reflects a 14% increase in square footage compared to the previous year, with 49 net new stores added since Q1 2023. A highlight is the company’s strong performance in international markets, particularly in China Mainland where revenue surged by 52% in constant currency terms in Q1. The growth is a sign of Lululemon’s (NASDAQ:LULU) ability to resonate with diverse consumer bases across different regions.
During the Q1 2025 earnings call, CEO Calvin McDonald emphasized the significant untapped potential in international markets and suggested that non-North American operations could eventually contribute up to 50% of the company’s revenue.
Looking ahead to 2024, Lululemon (NASDAQ:LULU) remains committed to expanding its footprint and is targeting the opening of 35 to 40 net new stores. The expansion includes a strategic focus on both domestic and international markets, with plans to open five to 10 stores in the Americas and the remainder in key growth regions such as China Mainland. Such initiatives are expected to drive low-double-digit growth in square footage, reinforcing the company’s commitment to enhancing its retail presence.
Aside from physical retail, Lululemon (NASDAQ:LULU) continues to leverage its digital capabilities to grow sales and customer engagement. The company stands out as an attractive investment opportunity driven by its compelling growth prospects, expanding global footprint, and strong brand presence across diverse markets.
Ithaka US Growth Strategy stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its first quarter 2024 investor letter:
“Lululemon Athletica Inc. (NASDAQ:LULU) is principally a designer, distributor, and retailer of healthy lifestyle inspired athletic apparel. It‘s moat is almost entirely based on its intangible brand asset. Of late, the company has benefited from both the longstanding athleisure fashion trend and the more recent pandemic-induced, work-from-home trend toward more casual attire. Approximately 45% of sales are generated across ~700 company-owned stores, 45% of sales (and growing rapidly) are generated online (lululemon.com), and ~10% of sales are generated by wholesale partners, which primarily comprise fitness studios. The stock’s underperformance was concentrated around the F4Q earnings announcement, which saw the company meet expectations for the current quarter but provide cautious commentary regarding tepid US consumer spending behavior.”
