Jim Cramer Highlights 2 Issues Hurting Lululemon

Lululemon Athletica inc. (NASDAQ: LULU)'s stock plummeted on Thursday to a new 52-week low of $50.50 on Thursday after the company's first-quarter guidance caught investors off-guard. The company attributed its poor outlook to a lack of color in its product lineups. But CNBC's Jim Cramer thinks there are two main issues hurting Lululemon's business.

Speaking during Friday's "Squawk on the Street" segment, Cramer suggested many women are happy with their non-Lululemon athletic apparel purchases from major brands as well as lesser-known brands like Sweaty Betty, which are satisfying customer demand for a more colorful product assortment.

As such, Cramer thinks there has been a very successful "gang-tackle" against Lululemon from the holiday season onward where retailers and fashion names "figured out" how to better take on Lululemon. However, this isn't the real issue plaguing Lululemon.

Lululemon Is Now A Fashion Company

Cramer continued that the real issue plaguing Lululemon is the fact that Lululemon is now a fashion company — rather than the more attractive "health and wellness secular growth story" it once was.

However, despite the new level of risk of investing in a fashion company, Cramer believes that Lululemon can be a long-term comeback story. In the near term, Lululemon may have set a low bar it can achieve.

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Image Credit: By lululemon athletica - SSC Yoga with Eoin Finn, CC BY 2.0, via Wikimedia Commons