Lululemon (NASDAQ: LULU) shares dropped precipitously following its 2025 guidance because it was weak. However, the guidance calls for growth and weakness, not because of some operational shortcoming but rather the economy at large and general headwind for retailers. Lululemon has no control over the macroeconomic situation, only its operations, which are growing, and earnings quality, which is improving.
The takeaway is that Lululemon is building leverage for itself and investors, its cash flow is solid, its balance sheet is healthy, and its capital returns are flowing, so the double-digit price discount looks like a good time to buy.
