Jim Cramer expressed skepticism about Lululemon's stock, which has fallen below $100 for the first time in over eight years, down more than 50% this year and over 80% from its December 2023 peak.
He highlighted a 9% decline in comparable sales last quarter, which was nearly double Wall Street's expectations, and noted concerning international performance, particularly in China where sales fell 2% against a forecasted increase of 14.5%.
Lululemon's outlook for the third quarter predicts a revenue drop of 10% to 11% year-over-year, with earnings projected at 93 to 98 cents per share, significantly below the $2.40 expected by analysts. Cramer pointed to intense competition from brands like Alo Yoga and Vuori, as well as changing fashion trends that challenge Lululemon's premium pricing.
He mentioned the recent appointment of new CEO Heidi O'Neill as a potential turning point, but emphasized the need for evidence of sales stabilization and improved competitiveness before considering the stock a buy.
Cramer concluded that, while the stock's low price-to-earnings multiple might seem attractive, it is not enough to warrant a purchase at this time, advising investors to avoid trying to capitalize on the current low price