Vision Capital Fund’s Views on Lululemon (LULU)

Vision Capital Fund, an investment management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned +15.6% net, YTD, compared to +14.8% for the S&P 500 for the same period. Since its inception on October 1, 2024, the fund has returned a cumulative of +27.8% net, compared to +17.6% for the S&P 500. Additionally, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Vision Capital Fund highlighted stocks such as Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories. The one-month return of Lululemon Athletica Inc. (NASDAQ:LULU) was 7.79%, and its shares lost 53.91% of their value over the last 52 weeks.  On December 08, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $183.04 per share, with a market capitalization of $21.937 billion.

Vision Capital Fund stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its third quarter 2025 investor letter:

Lululemon Athletica Inc. (NASDAQ:LULU) reported weak earnings in 1Q25 and 2Q25, with revenue growth of only +7% in 2Q25. While it continues to face headwinds in its core US market (~56% of revenues), with subdued growth of +0% YoY, it is still outperforming its larger competitors, such as Nike, by -7% and gaining market share. China remains strong, though experiencing some mild softness (reduced FY25 revenue growth guide from +30% to +25%). China (~16% of revenues) remains the largest growth driver for LULU, driven by continued faster store expansion and higher profitability relative to the Americas and ROW.

While new styles like Align No Line, Daydrift, and BeCalm have been well-received by customers, the increase in seasonal colours in its core styles has not led to sufficient newness to higher customer purchases, resulting in higher inventory that required higher markdowns to clear. This was unsurprising as typically brighter colours in retail sports apparel tend not to sell through as well and usually end up as discounted clearance fodder at the end of each season. Customers generally prefer not to stand out with loud colours, which also tends to limit the apparel’s more frequent wearability, a hallmark of Lululemon’s apparel…” (Click here to read the full text)

In another article, we covered Lululemon Athletica Inc. (NASDAQ:LULU) and shared Diamond Hill Large Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.