“Lululemon Athletica (LULU) is not a long-term BUY”[/posts/lululemon-is-not-a-long] - December 8, 2024

Consumer trends was the risk factor I provided, and then the P/E NTM plunged to levels never seen before (9.9). American Eagle (AEO) is at 8.7 and ANF is at 6.7. The Gap (GAP) should be a good base line comparison of a clothing company who’s stock is not priced based on speculative consumer trends (9.1). Now that LULU is priced similar to the other fashion brands, I believe it’s undervalued. A better explanation for slowing revenue growth is that consumers are in a per capita recession. This is true in Canada, where nominal savings has gone down for multiple years straight. Less savings means less money is spent on niceities. Even the stock is priced as if we are in a per capita recession!

Of course, then there’s Aritzia (ATZ.TO) which normally would indicate changing consumer trends, but it’s a growth stock trading at 31x P/E NTM with 12% growth and only C$3.4B TTM sales compared to LULU’s $15B. LULU was trading higher than it currently is when it too had $3.4B TTM sales (2019-2020). It would’ve been trading at $20B if it had a 31x P/E NTM.

Another example of why per capita recession is a viable explanation is that Nike (NKE), which has been getting pumpelled since 2021 has maintained it’s P/E ratios. This indicates that the brand is still alive, but that sales are going down. My explanation again is that although the system has more money, customers do not have that money.

A lot of Canadian companies are not affected by this since they are necessities or are export-driven. However, tellecommunications is where you can start to see the effects of lower nominal savings.

The solution to inflation-induced price floors for goods is not socialism but contractionary monetary polices that would allow natural deflation to occur due to consumers' loss of spending power since 2021.

— Elijah Lopez (@elibroftw) May 16, 2026