Buffett Brain · Research note
Score updated 28 Oct 2026 · analysis from 6 Oct 2026
LULU· Consumer Discretionary
Lululemon Athletica
Lululemon's strong brand and top-quintile margins are compelling, but the recent FCF decline and management's capital allocation raise questions.
Buffett fit
Partial fit
Owner
77
Durability
93
Management
64
Price
87
Score updated 28 Oct 2026 · analysis from 6 Oct 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Discretionary stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning Lululemon would mean capitalizing on its strong brand and top-tier margins.
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Lululemon's brand strength and consistent profitability over the past five years suggest durability.
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Management has shown discipline with a 7.14% yield over five years and a reduction in share count.
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With a of 9.0 and an yield of 7.11%, Lululemon appears attractively priced.
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- The 5-year price target and the return it implies
- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 1 of 20.2% is top-quintile in the sector, indicating efficient capital use.
- 2 of 55.7% exceeds the sector's top-quintile cutoff of 53.9%.
- 3 of 18.2% is top-quintile, showing strong operational efficiency.
- 4Net debt/EBITDA is a low 0.25, suggesting sound financial .
Concerns
7- 1 YoY growth has declined by 41.79%, raising cash flow sustainability concerns.
- 2/Net Income ratio of 0.58 suggests earnings are not fully converting to cash.
- 3No dividend yield, which might limit income for shareholders.
- 4Moderate complexity due to fashion trends impacting consumer preferences.
Price history
$105-77.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Lululemon operates through company-operated stores and direct-to-consumer channels, generating $11.1B in revenue. Its of 55.7% is top-quintile in the Consumer Cyclical sector, indicating strong and brand strength. The company has 574 stores globally, enhancing its brand presence. Unit economics are solid with an of 18.2%, reflecting efficient operations.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 28, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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