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lululemon athletica inc.

Data period: Annual Quarterly Graham uses annual
NASDAQ · Consumer Cyclical
lululemon athletica inc.
LULU · Apparel Retail
$111.77
▲ 0.01 (0.01%)
Cached · 10 min
Overall Grade
C
Defensive
C
Enterprising
Profitability
B⤢
Gross Profit Margin 54.2%
Operating Margin 11.2%
Net Income Margin 7.9%
Fin. Health
B⤢
Years to Pay Off Debt 11.0 yrs
Working Capital vs Long-Term Debt $421M
Working Capital $2.2B
Valuation
F⤢
Margin of Safety 0.0%
Price-to-Book 2.51x
Cash Flow
C⤢
Free Cash Flow $87M
CapEx % of Net Income 65.3%
Owner Earnings $458M
Defensive — Graham's strict criteria (P/B, P/E, dividends, stability)  ·  Enterprising — Profitability & cash flow focused, accepts higher valuations for quality
About lululemon athletica inc.
lululemon athletica inc., together with its subsidiaries, designs, distributes, and retails technical athletic apparel, footwear, and accessories for women and men under the lululemon brand in the United States, Canada, Mexico, China, Hong Kong, Taiwan, Macau, Greece, and internationally. It offers pants, shorts, tops, and jackets for athletic activities, such as yoga, running, training, and other activities. The company also provides fitness-inspired accessories. It sells its products through company-operated stores; seasonal stores, pop-ups, university campus retailers, and yoga and fitness studios; outlets; Like New, a re-commerce program; and its e-commerce website. The company was founded in 1998 and is based in Vancouver, Canada.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Market Data
Market Cap $12.7B
Enterprise Value $13.7B
P/E (TTM) 9.05
Dividend Yield N/A
Exchange NASDAQ
Key Margins
Gross Profit 54.2%
Operating Margin 11.2%
Net Margin 7.9%
Company Info
Sector Consumer Cyclical
Industry Apparel Retail
Employees 39000
Country Canada
Visit website
📖
Full Graham Analysis

Mr. Market is currently offering lululemon athletica inc. at $111.77.

The business passes only 3 of 7 of Graham's defensive criteria — well below his required standard.

At $111.77, the stock trades at a 172% premium to its Graham Number of $41.14. Graham would consider this price speculative.

There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.

Trading at 42.0x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies..

Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.

Showing Key Metrics
Income Highlights
Metric Q2 2026 Q4 2025 Q4 2024
Gross Profit % 54.2%▼ 55.6%• N/A
Operating Margin % 11.2%▼ 17.0%• N/A
Net Income % 7.9%▼ 12.0%• N/A
Diluted EPS 1.69▼ 2.59• N/A
Balance Sheet Highlights
Metric Q2 2026 Q4 2025 Q4 2024
Total Assets $8.5B $8.0B N/A
Total Debt $2.1B▲ $1.8B• N/A
Working Capital $2.2B▲ $2.1B• N/A
Years to Pay Debt 10.95 5.75 N/A
Cash Flow Highlights
Metric Q2 2026 Q4 2025
Free Cash Flow $87M▲ $82M
Owner Earnings $458M $602M
CapEx % of Net Income 65.3% 54.6%
📊 Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $2.4B ▲ $2.5B +4.3%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 58.3% ▼ 54.2% -4.2pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 11.7% ▼ 11.2% -0.5pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 13.3% ▼ 7.9% -5.4pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$2.5B/qtr (≈$9.9B ann.)
vs > $1.5B annualised revenue
✅ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
2.23x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$87M
vs Positive
Operating Cash Flow
$214M
Latest quarter · Buffett's cash reality check
ROIC
3.2%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
2.5x
Net Assets: $4.8B
⚠️ Net margin compressed 5.4pp vs same quarter last year. Common causes: one-time charges (restructuring, write-downs, legal settlements), tax rate changes, or rising interest expense. Check the income statement notes before drawing conclusions about operating health.
Peers & Industry
No auto-detected peers for Apparel Retail. You can manually compare LULU against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
4.71%
Moderate — some alignment with shareholders
Return on Equity (ROE)
4.0%
Weak — poor returns on equity
Return on Assets (ROA)
2.3%
Fair — average asset utilization
Share Buybacks (Latest Year)
$1.2B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
+18.8% YoY
Debt is growing — management is leveraging up
Leadership Team
Meghan Frank
Interim Co-CEO & CFO
Age 48
Pay: $1,168,642
0.599% of net income
Andre Maestrini
Interim Co-CEO, President & Chief Commercial Officer
Age 61
Pay: $1,232,951
0.632% of net income
Howard Brett Tubin
Vice President of Investor Relations
Jennifer Battersby
Senior Vice President of Product Engine
Top Institutional Holders
Institution % Owned Shares
Blackrock Inc. 8.76% 9,501,548
Vanguard Capital Management LLC 6.39% 6,930,622
Vanguard Portfolio Management LLC 4.77% 5,171,332
State Street Corporation 4.17% 4,521,326
FMR, LLC 3.97% 4,304,016
Geode Capital Management, LLC 2.86% 3,101,325
Federated Hermes, Inc. 2.77% 3,002,767
Flossbach von Storch SE 1.71% 1,857,905
Risk Analysis
Beta (Market Risk)
0.86
Low volatility — more stable than the market
Short Interest
6.7% of float
Moderate short interest
Debt-to-Equity
0.44x
Conservative balance sheet — low financial risk
Current Ratio
2.23x
Strong liquidity — Graham approved
52-Week Price Range
Low: $109.36 Current: $111.77 High: $252.24
Currently at 2% of 52-week range

lululemon athletica inc. (LULU) fundamental analysis — Overall grade C based on profitability, financial health, valuation and cash flow. Graham's Fair Value: $41.14. Margin of safety: 0%. Gross profit margin: 54.2%. Operating margin: 11.2%. Net margin: 7.9%. Market cap: $12.7B. Sector: Consumer Cyclical. Industry: Apparel Retail. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett principles.

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