Even the most patient investor in lululemon athletica (Nasdaq:LULU)
has to be dreading earnings release dates from this fast-growing
athletic apparel company. Not only does this stock experience the normal
volatility that goes with high-growth/high-expectation names (“You
missed comps by a half-point? Off with your head!”), but the
announcement of a major product defect (see-through pants) and now the
CEO resignation have added even more turmoil.
Through all of this, lululemon has remained an impressive growth story,
but maybe the cracks are starting to appear and competitors are starting
to up their games as well. While I'm solidly on board with the idea of
picking up growth stocks on pullbacks
that don't seem related to material events, the loss of a quality CEO
seems pretty material to me. Consequently, I'd be careful about piling
into lululemon with the idea that a quick rebound is guaranteed.
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