Michael Burry’s Scion Asset Management disclosed a new stake in Lululemon Athletica Inc., purchasing 50,000 shares valued at about $11.9 million, roughly 2.05% of its portfolio. The move came as Lululemon shares rose in early trading, climbing about 3.1% before settling near $198.73, up 1.8% from the previous close.
The development comes amid a backdrop of valuation weakness for the athleisure retailer. Lululemon’s stock is trading at a five-year-low price-to-earnings ratio, and it has fallen about 46.6% year-to-date. From its 52-week high of $421.16 in January 2025, the shares are currently around 52.8% lower. Over the past year, the company has repurchased about $1.77 billion of its own stock, a sign of management’s confidence in the stock’s valuation.
Macro and consumer-demand dynamics add another layer of complexity. July’s Producer Price Index rose 0.9%, the largest monthly gain since March 2022, underscoring higher input costs that could feed through to consumer prices. Market data shows appetite for premium athletic apparel has softened in the face of inflationary pressure, which has contributed to Lululemon’s softer performance this year. LULU has experienced a degree of volatility, with more than a dozen daily moves greater than 5% in the last year, though today’s gains suggest investors viewed Burry’s investment as notable but not a transformative catalyst.
A wider takeaway is that Scion’s stake may reflect a value-oriented mindset—investing in a high-quality brand at a price that some investors view as compelling after a sharp pullback. It also underscores the ongoing scrutiny and interest from notable investors in consumer brands with strong brand loyalty and product cycles.
Additional context and takeaways:
– The stake size is modest relative to Scion’s overall portfolio, but it signals possible conviction in Lululemon’s long-term brand strength amid short-term macro headwinds.
– Investors should monitor consumer-spending trends, inflation trajectories, and any further updates on Lululemon’s product cycles and margins, which will influence how the stock performs in the near term.
– If inflation moderates and discretionary spending stabilizes, Lululemon could benefit from continued demand for premium athletic wear and its ongoing share repurchase program could provide some support to the stock.
hopeful note: The already strong brand loyalty and robust product ecosystem give Lululemon upside potential if consumer confidence improves and price pressures ease, and Burry’s stake could draw additional investor attention to the stock in the near term.