Subject: Re: LULU
Analysis by Seeking Alpha analyst David Desjardin, who has lived alone in the Canadian wilderness for the last 4 years, but manages to keep up with the world of fashion.

https://seekingalpha.com/artic...

At its peak, lululemon was trading at ~34x forward earnings, meaning that this valuation multiple has now compressed by approximately 75%. This is perfectly in line with the magnitude of the share price drawdown, which implies that lululemon has primarily been subjected to multiple compressions rather than a deterioration of the underlying business. From a fundamental point of view, lululemon's operations continue to deliver record financial performance on an absolute basis, even though top-line growth has been pretty much absent for two years in its core U.S. market.

I would like to underscore how profitable lululemon truly is, with a free cash flow generation averaging $1.4 billion over the last three years. Using today's market capitalization of ~$14.5 billion, this represents a free cash flow yield of approximately 10%.

On top of its strong profitability and free cash flow generation, Lululemon ended fiscal 2025 with $1.8 billion in cash and cash equivalents. As illustrated in the balance sheet snapshot below, the company is also debt-free, and its $1.8 billion net cash position represents ~12% of its current $14.5 billion market capitalization. In addition to the solid top-line growth coming from international markets, LULU's significant cash balance is another element that should provide downside protection moving forward.