Is Lululemon Stock a Buy as It Sinks to $96 per Share? Here's My Honest Answer.
Key Points
Lululemon’s stock has plummeted to a multi-year low.
It looks cheap, but it deserves to trade at a discount to its peers.
Lululemon's (NASDAQ: LULU) stock closed at a record high of $511.29 per share on Dec. 29, 2023. At the time, investors were impressed by its robust growth -- especially throughout the pandemic -- and the expansion of its men's apparel, digital, and international businesses.
But today, Lululemon's stock trades at a multi-year low of about $96. Let's see why its stock plummeted, and if that pullback represents a buying opportunity for patient investors.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Image source: Getty Images.
Why did Lululemon's stock crash?
From fiscal 2022 to fiscal 2025 (which ended in Feb. 2026), Lululemon's revenue grew at an 11% CAGR, its gross margin expanded from 55.4% to 56.6%, and its EPS rose at a 26% CAGR. However, its revenue and comparable store sales growth are slowing to a crawl.
Metric |
FY 2022 |
FY 2023 |
FY 2024 |
FY 2025 |
|---|---|---|---|---|
Revenue Growth (YOY) |
30% |
19% |
10% |
5% |
Comps Growth (YOY) |
16% |
13% |
4% |
2% |
Gross Margin |
55.4% |
58.3% |
59.2% |
56.6% |
EPS Growth (YOY) |
(11%) |
83% |
20% |
(9%) |
Data source: Lululemon. YOY = Year-over-year.
For fiscal 2026, Lululemon expects its revenue to decline 5%-7%, and for its EPS to drop 27%-29%. Analysts expect its revenue and EPS to dip 6% and 27%, respectively.
In North America, its largest market, Lululemon is struggling with soft sales of women's apparel amid tough competition from smaller brands such as Alo Yoga and Vuori. Inflationary headwinds for consumer spending and unpredictable tariffs are exacerbating that pressure. It's relying more heavily on markdowns to boost its sales, but that strategy is diluting its premium appeal.
Lululemon is doing better overseas, but that growth couldn't offset the weakness of its North American business. Its hiring of Heidi O'Neill, a former Nike (NYSE: NKE) executive, as its new CEO didn't inspire much confidence, since Nike faces many of the same challenges.
Is Lululemon a contrarian buy?
At $96, Lululemon's stock looks historically cheap at less than 10 times this year's earnings. But it arguably deserves that discount because it faces too many macro and competitive headwinds.
For now, Lululemon is trying to stabilize its business by reining in markdowns, selling more full-priced merchandise, and throttling its brick-and-mortar expansion in North America. It's also expanding its lineup of loosely fitting apparel to reduce its dependence on tight-fitting products, and launching more aggressive marketing campaigns to win back its shoppers.
However, that balancing act could be difficult to pull off as long as its comps keep declining. So while Lululemon's stock looks cheap at these levels, I wouldn't buy it as a turnaround play yet.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy.