$LULU was once a darling for the IBD.
It rides on a good wave, targeting the well-heeled and the growing yoga sports culture a couple of years back.
As a retailer, LULU’s growing income hinges on its ability to increase its store first across the nation, second the region and third internationally.
It was the International market that I have been waiting. Most companies expands real quick in the North America easily as they enjoy similarities.
However, the challenge will set in as they try to embrace International business in Europe, Middle East and Asia. All of a sudden, they find themselves lacking the strengths to expand. Or the markets outside of their core region does not embrace their products as easily.
In my opinion, LULU is in such a situation. Its growth will be slowing soon. Margins will soon be eroded. And it will heads towards the $20+.
At this moment, LULU is trading below the kumo since the breakdown of the market a month back. As it rallies back together with the general market, I see opportunities for shorts.