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Lululemon Athletica Inc. (LULU), based in Vancouver, Canada, is a leading retailer known for its premium athletic apparel and accessories. With a market cap of $33.6 billion, Lululemon is committed to delivering high-quality, performance-oriented products tailored to active lifestyles. The company's diverse offerings include yoga pants, running gear, and a wide range of athletic wear, all designed to enhance comfort and performance.
Over the past year, LULU stock has significantly underperformed the broader market, plunging 28.9% compared to the S&P 500 Index ($SPX), which rose 27%. In 2024 alone, LULU has plummeted 47.5%, lagging behind SPX's gains of 18.1% on a YTD basis.
Zooming in further, LULU also trails behind the Vaneck Retail ETF’s (RTH) 20% gains over the past 52 weeks and an 11.7% rise on a YTD basis.
Lululemon's weak stock performance is driven by limited earnings visibility and growing difficulties in acquiring and retaining customers, exacerbated by a maturing U.S. market, intensified competition, and an unpredictable slowdown in consumer spending.
Lululemon's shares rose over 4% on Jun. 6 following the company's Q1 earnings report. Lululemon projected full-year revenue between $10.7 billion and $10.8 billion, with net revenue for the current quarter expected to range between $2.40 billion and $2.42 billion.
For the current fiscal year, ending in January 2025, analysts expect LULU’s EPS to improve 11% year over year to $14.17. Additionally, the company's earnings surprise history is impressive. It beat the consensus estimate in all of the last four quarters. The company surpassed the consensus earnings estimate by 6.7% in the last reported quarter.
LULU’s stock has a consensus “Moderate Buy” rating overall. Among the 27 analysts covering the stock, 14 have assigned it a "Strong Buy" rating, two suggest “Moderate Buy,” nine advise “Hold,” one gave it a “Moderate Sell,” and the remaining one analyst recommends a “Strong Sell.”
This configuration is less bullish than a month ago, with 16 analysts suggesting a “Strong Buy” for the stock.
On July 22, Piper Sandler Companies (PIPR) initiated coverage of Lululemon with a “Neutral” rating and a $250 price target. The firm noted that Lululemon's shares have halved year-to-date, reflecting market concerns over potential negative revisions.
The mean price target of $348.62 suggests a 29.8% premium to LULU from current levels. The Street-high target of $525 represents an impressive upside potential of 95.5%.
On the date of publication, Kritika Sarmah 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.
