ONON, LULU, NIKE, DECK, BIRK, ANTA Sector Analysis

Value Investing with Sven Carlin, Ph.D.•Aug 28, 2026

Summary

Sven argues that the fashion industry is inherently risky due to changing consumer preferences and the difficulty brands face when trying to scale beyond a certain revenue threshold. Sven states that most fashion brands encounter a growth 'ceiling' at around $4 billion, leading to decreased margins and higher risks as they attempt to compete with global leaders. Sven emphasizes that a true margin of safety in this sector usually requires a P/E ratio of approximately 10, a metric many current fashion stocks have yet to reach despite recent price declines.

Nike (NKE): Sven states that Nike currently looks 'terrible' to the market, which typically presents an opportunity for value seekers. However, Sven notes that intense competition from newer brands and changing trends make Nike a risky play at this stage. Sven suggests that waiting for a confirmed upward trend, as recommended by Peter Lynch, might be a safer approach than buying during the current decline.

Lululemon (LULU): Sven argues that Lululemon is historically cheap and mentions that Michael Burry appears to have a significant interest in the company. Sven states that while a new CEO could potentially drive a 50% upside through better cash flow management and renewed growth, Sven requires more certainty before calling it a value investment. Sven points out that despite the lower valuation, recent scandals and slowing momentum in China remain valid concerns.

On Holding (ONON): Sven states that On Holding is showing signs of a classic growth deceleration, with sales growth dropping significantly. Sven warns that fashion brands are often only successful as long as they maintain a 'cool' niche status, which is difficult to sustain during global expansion. Sven believes the current P/E ratio of 20 is too high given the risk of stagnation similar to what happened with Under Armour.

Anta Sports (ANPDY): Sven finds Anta Sports interesting because of its strong steady growth and strategic expansion in the Asian market through brands like FILA. Sven notes that the company is performing well with dividends and buybacks, offering a different profile than Western competitors. However, Sven argues that the stock is not yet 'cheap enough' to provide the margin of safety Sven seeks, especially with strong regional competition like Decathlon.

Mentioned Stocks

NKE

Sentiment: HOLD

Reasoning: Sven states that while Nike's stock looks 'ugly' and is significantly down from its highs, the competitive landscape has changed with many new rivals. Sven suggests following Peter Lynch's turnaround strategy of waiting for the stock to start trending upward, such as at $50, rather than buying at the absolute bottom. Sven currently views the stock as risky due to market saturation and changing consumer preferences.

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LULU

Sentiment: HOLD

Reasoning: Sven argues that Lululemon is historically cheap and notes that Michael Burry appears to have a large position in the stock. Sven states that a successful turnaround by the new CEO could lead to a 50% upside, but Sven personally requires more certainty and a better margin of safety. Sven highlights that while growth remains, issues like the 'drum scandal' and slowing momentum in China are concerns.

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ONON

Sentiment: SELL

Reasoning: Sven states that On Holding is experiencing a significant deceleration in growth, with net sales growth dropping from historical highs to around 13%. Sven warns that fashion brands face immense risk once they move beyond their initial niche and attempt to compete with global giants. Sven believes the current P/E ratio of 20 does not offer enough protection if sales continue to stagnate.

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ANPDY

Sentiment: HOLD

Reasoning: Sven finds Anta Sports interesting because of its steady growth in Asia and its portfolio of brands like FILA. Sven notes that the company is engaging in buybacks and dividends, which are positive signs for value investors. However, Sven argues the stock is not yet 'cheap enough' to meet the requirement for a P/E of 10 to ensure a true margin of safety.

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