Lululemon faces risks from fluctuating foreign currency exchange rates, impacting revenue and expenses. Competition from larger, established athletic apparel companies poses a threat to market share and profitability. Supply chain disruptions, including material shortages and manufacturing delays, are potential issues. Product defects, legal proceedings, and activist stockholders could lead to significant expenses and reputational damage. Economic downturns and consumer spending patterns are also significant risks. Finally, compliance with evolving environmental, social, and governance (ESG) regulations and investor scrutiny adds to the company's operational and financial risks.
Financial Upside
Lululemon experienced revenue growth in the first three quarters of 2024, particularly in China Mainland and Rest of World. Comparable sales increased, indicating strong performance in existing markets. Gross profit and income from operations also saw increases, suggesting improved profitability. The acquisition of lululemon branded retail locations in Mexico presents a potential expansion opportunity. The company's stock repurchase program suggests confidence in its future prospects.
