Lululemon Athletica (NASDAQ: LULU) is suing Costco Wholesale (NASDAQ: COST) for selling similar, knock-off products in its warehouses. For the high-end apparel company, how this ends up playing out could be a make-or-break moment for its stock.
Shares of Lululemon are down close to 50% this year as investors have grown concerned with the company’s lackluster growth and worrisome exposure to China. The stock hasn’t been trading at these levels since 2020, and depending on your outlook for the business in the long run, Lululemon could either be a steal of a deal right now, or nothing more than a value trap.
What could end up determining that is its battle with Costco.