Macquarie Sees Lululemon's Inventory Figures Continuing To Worsen

Macquarie analyst Laurent Vasilescu issued a scathing note on Lululemon Athletica inc. LULU Thursday. The note, which followed lululemon's first-quarter earnings report, showed concern related to the company's consistently growing inventory levels.

Vasilescu's note prefaced by alerting Macquarie clients and investors "we count days in inventory, not growth year over year."

"78 days... then 88 days... then 93 days... and now 101 days. These are the days in inventory for the first quarter over the last four years," according to the Macquarie note.

Vasilescu warned if second-quarter inventories grow about 8 percent on a year-over-year basis, inventory would be about 105 days compared to a historical average of just 88 days for the second quarter.

"With this much inventory – yes – this will drive sales but the bottom line continues to deteriorate. And at some point – flow through to the bottom line will matter for a peak multiple," Vasilescu said.

Macquarie maintained an Underperform rating and $39 price target on shares of lululemon.