Can Lululemon Stock Reverse Its Fortunes?

Once a high-flying star in the athleisure sector, Lululemon now confronts a challenging period. Leadership instability and softening sales in its core North American market have driven the share price downward. However, the company's aggressive international expansion strategy may offer a critical lifeline. The central question for investors is whether this will be sufficient to break the persistent downward trend.

As domestic performance falters, Lululemon's international operations are showing remarkable strength. In China, comparable sales surged by 17 percent during the second quarter, contributing to an overall revenue increase of 25 percent in the region. China has now solidified its position as the company's second-largest market outside of North America.

The growth roadmap abroad is ambitious. The company plans to open additional retail locations in China and is preparing for a market entry into India by 2026, facilitated through a franchise partner. Lululemon's leadership continues to project robust revenue growth of 20 to 25 percent for the Chinese market for fiscal year 2025. This international momentum could provide essential stability to the company's overall financial results, particularly if planned new product launches materialize in 2026.

Leadership Instability Creates Investor Jitters

The corporate suite is experiencing significant turbulence, with the departure of a second top executive in less than two years. Celeste Burgoyne, who held the roles of President for the Americas and Global Innovation Lead, is scheduled to leave at the end of December 2025. Recognized as a key architect behind the brand's North American expansion, her exit creates substantial gaps in senior management and raises valid concerns about strategic continuity. In light of these uncertainties, the financial firm Needham maintains a "Hold" rating on the stock.

Should investors sell immediately? Or is it worth buying Lululemon?

Core North American Business Faces Headwinds

Compounding the leadership challenges, Lululemon's primary market is showing clear signs of strain. Analysts at UBS recently reduced their price target for the stock, citing weak sales momentum observed in November. Their forecast is sobering, anticipating a 4.5 percent decline in U.S. revenue growth for the third quarter and the potential for a downward revision to earnings guidance. Even a newly announced partnership with American Express has failed to counteract the negative sentiment.

The difficulties are multifaceted:
- Waning consumer enthusiasm for the athleisure category
- Intensifying competitive pressures
- Delays in major product introductions, now expected no sooner than Spring 2026

The analytical community is divided on the stock's prospects. Jefferies maintains a notably pessimistic "Underperform" rating with a price target of $120. In a contrasting move, BNP Paribas Exane recently upgraded its stance from "Underperform" to "Neutral," suggesting that the current share price may already reflect much of the negative news.

Valuation Presents a Compelling Dilemma

From a valuation perspective, the stock appears increasingly attractive. It currently trades at a P/E ratio of just 11.3 and has declined nearly 60 percent since the start of the year. The consensus analyst price target of $227.68 implies a theoretical upside of 21 percent. The critical uncertainty for the market is whether Lululemon can successfully execute a operational turnaround, or if the former trendsetter has permanently lost its momentum.