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Jefferies downgrades Lulu stock to Underperform ahead of earnings results

Yahoo Finance Live anchors discuss earnings expectations for Lululemon and the athletic apparel retailer's belt bags.

Video Transcript


- Lululemon shares off just about 1% right now. Jefferies downgrading this stock to underperform ahead of the retailer's earnings, the results later this week, saying that even though this quarter will be strong, helped by the popularity of their belt bags, Lululemon's long-term projections are just too aggressive. Increased competition is something to worry about, as well as the promos. There is certainly a lot to unpack in this note, but we want to talk a little bit more about the belt bag trend. We've got two of them on set with us.

Before we get into maybe why it's so popular, why so many people are buying them right now, I want to pull up a chart that was included in this Jefferies note. Now, they're talking about how the Google search trends of the Lululemon belt bag, how that compares to maybe what we saw at Under Armour with the popularity of their face mask a couple of years ago. So the purple line is the Under Armour face mask. And you can see, it peaked right around July 2020, and then pretty much fell off a cliff.

Jefferies is making the argument that maybe we could be near the peak right now of this belt bag trend, Dave. And we could see it fall off a cliff. So uncertainty there in what that means for the accessories business. But it just also talks about the popularity of these things, which shocked to you.

- I'm struggling a little bit with the correlation with the mask, because that is strictly a COVID factor in which we are not wearing masks anymore. And in any real fashion trend like a-- to me that's still a fanny pack. Would you call it a belt bag?

- A belt bag.

- Belt bag, OK. To me, anything in that sense is periodic, is slow. So I've never worn one.

I'm shocked that these are a trend at all. This has to only be in major cities, right? There is no way people are wearing these in the suburbs.

- Well, they should be if they're not.

- Because I've seen one.

- You're also putting it on wrong. This is [? what-- ?] no one moves it like that. It's-- no, so you look at it--

- Oh, Dave.

- Does this remind you of when you-- did you used to wear a fanny pack when you were younger? That's not how you wear--

- That's the first fanny pack I've ever worn.

- OK, this is how people are wearing them. I own one, full disclosure. It is probably the best $38 I've ever spent.

Look at this. You wear it like this. Fits your phone. Put it right in here. When you're a mom on the go, when you have kids-- even if you don't, if you have keys, you just put it-- you could wear it behind you.

- Yeah, see.

- Right in the front, Rachelle. Doesn't it make a lot of sense?


- Dave isn't doing it justice. You're making me like my-- because I have one. Of course, mine is, like, super shiny. Mine is extra because I'm a bit extra.

- Ooh.

- It's got my name on it--

- Do you wear it like that, or do you wear it like I do?

- Yeah, you wear it across. You don't wear it-- makes you feel sad about yourself. You're going to wear it, wear it cute, Dave. You not wearing it cute.

- Dave, you got to take-- yeah.

- Then it should be called a shoulder bag, not a belt bag.

- You know-- I don't know. It's all part of the trends.

- That'll do it. I think the bigger thing is competition in the men's clothing category, because everyone is getting into athleisure.