Lululemon Athletica Is 'Over-Investing In Innovation,' Analyst Cuts Price Target

There could be further risk to Lululemon Athletica Inc's (NASDAQ:LULU) estimates, given its continued product execution issues and sale section growth, according to Piper Sandler.

The Lululemon Athletica Analyst: Analyst Anna Andreeva maintained a Neutral rating, while reducing the price target from $270 to $200.

The Lululemon Athletica Thesis: The company has 57 instances of innovation and newness in color year to date, which is almost three times the levels last year, Andreeva said in the note.

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The number of SKU’s on sale from the We Made Too Much tab started to pick up mid-June, the analyst wrote. The last three weeks of July ran in the 1,000+ SKU range, levels now slightly above last Holiday and vs.~600 SKU’s on average last July.

Lululemon offered a 25% discount on as many as 15 full-priced items in June, she added.

This over-investment is evident from new products moving quickly to the clearance racks, which helps explain the higher discounting being offered, Andreeva further stated.

Price Action: Shares of Lululemon Athleticahadrisen by 0.64% to $217.97 at the time of publication on Tuesday.

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• Is Lululemon Headed For Its Nike Moment?

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