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Based in Vancouver, Canada, Lululemon Athletica Inc. (LULU) designs, distributes, and retails athletic apparel, footwear, and accessories for yoga, running, training, and other activities. Valued at $38.98 billion by market cap, the company offers a line of apparel, including fitness pants, shorts, tops, and jackets.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and LULU perfectly fits that description, signifying its substantial size, stability, and dominance in its industry.
The premium athletic apparel and accessories major has fallen 39.6% from its 52-week high of $516.39, which it hit on Dec. 29, 2023. Shares of LULU are down 22% over the past three months, underperforming the broader S&P 500 Index’s ($SPX) 4.8% gains over the same time frame.
Longer term, LULU has declined 15.9% over the past year and 38.5% in 2024. By contrast, the SPX is up 15% on a YTD basis and 26.1% over the past 52 weeks.
To confirm the recent bearish price trend, LULU has been trading below its 50-day and 200-day moving averages since late March.
On Jun. 6, LULU shares closed up more than 4% after reporting its Q1 results. Its EPS came in at $2.54, beating the consensus estimate of $2.39. The company raised its 2025 EPS forecast to between $14.27 and $14.47 from the previous forecast of between $14 and $14.20, above the Wall Street estimates of $14.17. LULU expects full-year revenue between $10.7 billion and $10.8 billion and net revenue for the current quarter between $2.40 billion and $2.42 billion.
LULU’s overall performance can be attributed to weaker demand from the Americas during Q1. Sales rose only 3%, a sharp decline compared to the 17% growth witnessed in the year-ago quarter. In late May, LULU also saw the departure of its Chief Product Officer, Sun Choe, who was instrumental in the company’s expansion into footwear. She was also in charge of launching the company’s men's footwear series earlier this year and was key to LULU’s innovative designs and releases.
Investors have recently feared that the company was losing some of its brand power. In May, Jefferies analyst Randy Konik said that the overall athleisure category was slowing down, and fashion was shifting to wide legs. He also said that competition was rising within the space, given the presence of Alo and Vuori.
Rival DICK'S Sporting Goods, Inc. (DKS) has outperformed LULU. DKS stock has gained 70.6% in the past 52 weeks and is up 56.2% on a YTD basis.
Despite its recent underperformance compared to SPX, analysts are optimistic about LULU’s prospects. The stock has a consensus rating of “Moderate Buy” from the 27 analysts covering it, and the mean price target of $405.69 is a premium of 30.1% to current levels.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
