Lululemon downgraded to Neutral from Buy at Citi

Citi analyst Paul Lejuez downgraded Lululemon Athletica to Neutral from Buy with a price target of $300, down from $415. Following years of benefitting from outsized growth in active apparel, trends in the category have slowed in fiscal 2024 with Citi’s credit card data in yoga and active apparel pointing to a further deceleration in Q2 versus Q1, the analyst tells investors in a research note. The firm says this dynamic, coupled with Lululemon’s execution issues, leave the company more susceptible to increased competition and promotional pressures in the second half of 2024 and 2025. Citi believes category weakness and a tougher macro backdrop make it unlikely Lululemon sees a reacceleration in U.S. trends in the second half of the year. Further, incremental weakening of the Chinese consumer environment is an added risk to the stock, says the firm.