Baird Reduces PT on lululemon athletica (LULU) Stock
A store employee in an athletic apparel store restocking merchandise.
lululemon athletica inc. (NASDAQ:LULU) added 3 net new company-operated stores during Q1 2025, ending with 770 stores. The company's gross margin came in at 58.3% in Q1 2025 as compared to 57.7% in Q1 2024. The rise was mainly because of a net increase in product margin of 110 bps, comprising a net increase of 130 bps due to reduced product costs and increased average unit retail, and lower damages, partially offset by elevated freight costs, and an unfavorable impact of foreign currency exchange rates of 20 bps.
Diamond Hill Capital, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
'Other bottom contributors in Q1 included Lululemon athletica inc. (NASDAQ:LULU), General Motors and Capital One. Shares of athletic apparel manufacturer lululemon were pressured amid ongoing concerns about potential brand saturation in the Americas, its largest market. However, we believe the company is operating well and is positioned to improve US sales performance while continuing to grow international sales — factors that make the current valuation compelling, in our view.'
While we acknowledge the potential of LULU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now
Disclosure: None. This article is originally published at Insider Monkey.
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