Channel checks from the firm show clearance items are limited to one or two racks per store.
"With shares down substantially from August highs, we believe buy-side expectations embedding both sales and margin miss; comps in line with MSD guide; and still potential for better margins sufficient at these levels," writes analyst Anna Andreeva.
Oppy keeps an Outperform rating on LULU and slides its price target to $70.
Now read: Lululemon: Buy The Dip? »