Burry cited lululemon’s new management’s failure so far to reverse a prolonged “black hole” in marketing and messaging, which has left the stock overlooked during a low-information stretch.
- Lululemon is currently navigating a dual challenge of sharp earnings pressure and a major leadership overhaul.
- The hedge fund manager sold LULU shares in October for a tax loss.
- Burry also increased positions in several other names, including PayPal, MercadoLibre, Adobe, and JD.com.
Famed investor Michael Burry said on Wednesday that he bought back into apparel maker Lululemon Athletica (LULU) after shares fell into the $106 range, framing the move as a bet on temporary neglect rather than permanent damage.
Re-Entry Into Lululemon
Burry cited new management’s failure to reverse a prolonged “black hole” in marketing and messaging, which has left the stock overlooked during a low-information stretch. He expressed confidence in the company’s research and product development, calling the current price a favorable risk-reward with limited downside and reiterating his June analysis on the stock.
In a June Substack piece, the hedge fund manager cataloged a history of self-inflicted setbacks at Lululemon due to bad management, and argued that these episodes create value opportunities, while maintaining that the underlying business is not collapsing but is simply stalled. In early October, he sold shares for a tax loss, temporarily swapping into Deckers Outdoor as a proxy with the explicit intention of repurchasing after the wash-sale window.
Lululemon is currently navigating a dual challenge of sharp earnings pressure and a major leadership overhaul. In its second-quarter fiscal 2026 results, revenue fell 4% to $2.4 billion with comparable sales down 9%, while signature leggings sales plunged about 20%. The company cut full-year guidance to a 5–7% revenue decline and EPS of $9.48–$9.73, well below the prior year’s $13.26, and warned of a further 10–11% revenue drop in the third quarter.
New CEO Heidi O’Neill, a longtime Nike executive who took the helm in early September, has rapidly restructured the senior team, appointing a new President & Chief Product Officer, Chief Operating Officer, Chief Brand Officer, and Chief Strategy Officer, aiming to refocus the company on product innovation, brand, and execution.
Burry’s Other Portfolio Additions
Burry also increased positions in several other names. He bought more MercadoLibre (MELI) shares below $1,500.
“The falling Brazilian real hurts the company’s bottom line. It does help to some extent with international competition from Temu, Shein, and Amazon, but not enough. This is why the stock is down, but it has been punished too harshly,” Burry said.
He also added to Sprouts Farmers Market (SFM) in the $48s range, noting a steady reduction in shares outstanding from 133 million to 92 million over the past decade and the appeal of continued buybacks at depressed prices. While acknowledging a softer consumer that currently favors Costco and Walmart, he views the pressure as temporary and organic growth as intact.
Adobe (ADBE) received further buying. Burry described the company’s recent hard push to disable older perpetual licenses and force subscriptions as likely to boost revenue. PayPal (PYPL), meanwhile, was increased in the $59s range to a smaller but full position. Aggressive buybacks have driven market capitalization lower than the price of a previously rejected takeover offer from Stripe and private-equity firm Advent International, he noted, adding that it makes a “pretty concrete value case.”
Expert Take On China And Copper
He further added to JD.com (JD), which he called the most undervalued stock in his universe. “I do wish JD would use its remarkable cash flow and cash pile to buy back more stock,” Burry said while noting that outstanding share count has already fallen by more than 220 million to 1.34 billion since 2023, though more buybacks are needed. The stock has suffered as part of the broader Hong Kong technology complex that has lagged during the AI boom, the investor said.
Finally, he bought more shares of Brazilian miner Ero Copper (ERO) on a pullback. Burry said that he remains bullish on copper demand from multi-year infrastructure upgrades tied to AI and aging power grids.
How Did LULU Retail Traders React?
On Stocktwits, retail sentiment around LULU stock stayed within the ‘neutral’ territory over the past 24 hours, while message volume fell from ‘normal’ to ‘low’ levels.
LULU stock has dropped 48% year-to-date.
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