I think this is a great take. A lot of people got anchored to the period of time when LULU was 40x earnings. 15x and 10x feel cheap when you think it's worth 40x, but that's classic value trap dynamic. Fact of the matter is LULU isn't the only player in the "leggings that make butts look good" industry anymore
One other competitor worth noting is Gymshark. Super cheap and decent quality available online only (aka low fixed cost business model) with super strong marketing via Instagram and influencers. Another example of how low the barriers to entry have become.
Great piece! The apparel space has very, very low barriers to entry and therefore competitive intensity just is brutally high. Not a great industry for long-term investments.
I think this is a great take. A lot of people got anchored to the period of time when LULU was 40x earnings. 15x and 10x feel cheap when you think it's worth 40x, but that's classic value trap dynamic. Fact of the matter is LULU isn't the only player in the "leggings that make butts look good" industry anymore
One other competitor worth noting is Gymshark. Super cheap and decent quality available online only (aka low fixed cost business model) with super strong marketing via Instagram and influencers. Another example of how low the barriers to entry have become.
Great piece! The apparel space has very, very low barriers to entry and therefore competitive intensity just is brutally high. Not a great industry for long-term investments.