[Abridged] lululemon athletica (LULU): An Ode to Bad Management & The Politics of Skin-Tight Leggings
Michael Burry
· Cassandra Unchained
· June 26, 2026 at 14:46
· ⏱ 1 min read
| Read on Substack ↗
Summary
Lululemon has a history of recovering from self-inflicted crises, with gross margins and stock price rebounding sharply after past scandals. The author argues that current turmoil mirrors the early 2010s pattern, implying that the present weakness may be a buying opportunity for patient investors.
•LULU's gross margins collapsed from ~56% to ~48% in 2013 after transparent yoga pants and CEO Chip Wilson's controversial comments, then recovered to 58%+ under CEO Calvin McDonald.
•A Trump-era law cost LULU 250 basis points of gross margin due to overseas operations.
•The stock quadrupled from its 2014 low to $160 by September 2018 after the operational turnaround.
•The author states: 'Today’s turmoil mirrors that of the 2010s. That is a good thing.' — directly comparing current challenges to the prior recovery setup.
Read time1 min
Length1,190 chars
Categoryfinance
Ideas
Michael BurryFounder, Scion Asset Management; subject of The Big Short
Author draws a direct parallel between current turmoil and the early 2010s, when LULU quadrupled after recovering from management blunders and margin compression. Implicit bullish thesis: current weak
Author draws a direct parallel between current turmoil and the early 2010s, when LULU quadrupled after recovering from management blunders and margin compression. Implicit bullish thesis: current weakness may offer a similar entry point. Quote: 'Today’s turmoil mirrors that of the 2010s. That is a good thing.'
Risk: History may not repeat — management could fail to execute a second turnaround, or macro/competitive headwinds could be worse this time.