It wasn’t so long ago that clothing retailer Lululemon (NASDAQ:LULU) was on top of the world, as people looked for comfy clothes because they weren’t going anywhere anyway. But as return-to-office mandates get fired up in earnest, and those on the bad end of surging layoffs find themselves less interested in buying clothes, the effect is hitting Lululemon hard. That sent shares into a nosedive, down over 6% in the closing minutes of Wednesday’s trading session.
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Lululemon’s net revenue, based on word from the research firm Yipit, was up 11% in the latest year-over-year comparisons. That sounds great. However, it’s worth noting that sales also turned negative in the middle of the month, as women’s wear and handbags took a hit, with online selling actually seeing the worst drop. Still, it’s not like Lululemon is alone here; The Gap (NYSE:GPS) is down 9% on the year, and even Nike (NYSE:NKE) is down 5% as the whole athleisure trend seems impacted.
Things Don’t Look Great for Lululemon Right Now
Admittedly, things don’t look great for Lululemon right now. It’s fending off some sticky-fingered employees, including one from Florida which managed to steal $18,000 from the company before ultimately being caught. Meanwhile, some analysts are seeing a critical sell signal go off in Lululemon’s recent trading, as its latest slump sent shares below their 50-day moving average. There was a moment when they almost turned that around enough to call for a buy signal instead, but the momentum was lost through the day.
However, Lululemon isn’t taking this lying down and recently joined up with Peloton (NASDAQ:PTON) to offer some free gifts in the “Move for You” challenge. That should help keep at least some customers in the fold for both, which would be good news given the circumstances.
What Is the Target Price for Lululemon?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on LULU stock based on 21 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 43.36% rally in its share price over the past year, the average LULU price target of $525 per share implies 15.62% upside potential.
