Lululemon Stock Prediction: Athleisure, the Biggest Moneymaker in Apparel

This article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Lululemon Stock Prediction


  • Background on Lululemon Athletica Inc.
  • Lululemon Stock on an Uphill Journey
  • Athleisure Single-Handedly Pulling the Apparel Market Along?
  • Analyst Recommendation
  • Bullish I Know First Forecast on LULU



Lululemon Athletica Inc., is a Canadian athletic apparel retailer. It is a self-described yoga-inspired athletic apparel company and a designer and retailer of technical athletic apparel, which produces a clothing line and runs international clothing stores from its company base in Vancouver, British Columbia, Canada. The company makes a number of different types of athletic wear, including performance shirts, shorts, and pants, as well as lifestyle apparel and yoga accessories. They sell their clothing internationally. Key competitors include Athleta, Nike and Under Armour.

Lululemon Stock on an Uphill Journey

December 2, 2016 was the beginning of an upward trend for the athletic company. On December 2, Lululemon closed at $55.31, which was actually down $1.22 from its previous close of $56.53. In the last 14 days, the company has gone up 19.4% and now stands at $68.64 per share.

Lululemon Stock

LULU’s Q3 earnings were released on December 8, 2016. Estimates on earnings and sales were surpassed for the year. The company has also began buying back $100 million of their shares which has boosted their share price by 15%. The company also has a five year goal of doubling their revenue and LULU seems to be on track in 2020, and may even exceed their goal. Within Q3, LULU’s gross profit went up 23.9% and is now at $278 million which was a result of better margins in merchandising. Operating income also increased 36.4% to about $93 million because their operating margin has expanded roughly 300 basis points or about 17.1% of sales.

Athleisure Single-Handedly Pulling the Apparel Market Along?

The company opened 12 new stores this quarter and since the same quarter of last year, they have increased their stores by 35. They now have 389 stores with a goal of opening 42 more stores by the end of the year.


With the increase in health minded individuals all over the world, the popularity into athletic clothing has escalated. With popularity, it seems that there is a new trend called athleisure wear which simply means that more people are wearing athletic apparel as their casual, leisure-wear. The apparel market seems to be slowing down, with only a 2% rise since 2015, however; the apparel market would have dropped 2% not including the athleisure wear market that rose 16%.

Athleisure isn’t just about being health-minded, it’s about being comfortable. We live in a fast paced world where comfort has become an integral part of life. In the past, comfort meant fashion wasn’t important and essentially went out the window. When a woman picked comfort over fashion, it was generally frumpy clothing that took over her closet. With the new trend, frumpy clothing isn’t the sign of comfort anymore. Comfort is a fashion statement. Chip and Shannon Wilson, the CEO’s of Lululemon had this goal in mind when they started the company. They wanted to transform the way comfort looks. It’s actually genius, athletic clothing is usually only worn when sports or the gym are involved, which means that a few workout outfits are all that is necessary. However, the couple has turned their gym clothes into a gold mine, where it has become not only the standard wear for the gym, but also the standard outfit in a woman’s closet. Athleisure is versatile, a woman can wear a nice outfit to work that can then be used as an outfit for the gym during her lunch break or after work, without even bringing a change of clothes.lululemon-and-go

Analyst Recommendation 


According to Yahoo Finance, LULU has a rating of 2.4 which means that it’s about halfway between “buy” and “hold.” While the rise on LULU has been quick and hefty, there is still a looming uncertainty about whether the stock will continue to perform in this way. Although LULU can continually grow in share price due to its exceptional revenue and increase in operating income, stores, etc., there is also a possibility that the share price may level out by end of year. But as with any investment, there is a risk and reward. The future of LULU seems bright and I would tend to lean more towards buying than holding.

Bullish I Know First Forecast on LULU

I Know First currently maintains a bullish stance on LULU with signal strength 239.03 and predictability 0.54 for 1 year forecast.


I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.


Lululemon has laid the groundwork for a perfect money making machine. They have made a trend based on a product that already existed, which allowed them to improve the product and then turn it into a staple for more than what its original use was for. Because of this, they will be around, creating functional yet fashionable apparel for years to come.