LULU – Market expectations are for Uniform ROA to reach new peaks, but management appears concerned about MIRROR, sales, and North America

• Lululemon Athletica Inc. (LULU:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings with a 67.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about the MIRROR acquisition, e-commerce sales, and North American operations
  
  

• Specifically, management may lack confidence in their ability to sustain e-commerce sales growth, improve the customer experience, and successfully integrate the MIRROR acquisition. Furthermore, they may have concerns about supply chain issues in the MIRROR business and their digital marketing strategy. Moreover, management may be exaggerating the strength of the overall business, the potential of their omnichannel investments, and the attractiveness of all four sweat activities. Finally, they may be concerned about their North American operations and the impact of safety restrictions on their physical stores