Lululemon Athletica is trading 4.02% down now at $117.84 after Morgan Stanley reiterated its Underweight rating and warned incoming CEO Heidi O’Neill’s “shrink to grow” strategy could create a multi-quarter earnings headwind.
- The strategy may involve fewer stores, less discounting, and a product reset. Morgan Stanley also believes consensus growth expectations remain too optimistic.
- Concerns include slowing Americas demand and execution during the leadership transition. Company-specific weakness stands out against a broadly higher market, with Nasdaq up 0.42% and S&P 500 up 0.14%.