Start here if you're new
what it is
Lululemon sells premium workout clothes and accessories through 767 stores and its website.
how it gets paid
Last year Lululemon made $10.6B in revenue.
why it's growing
Revenue grew 10.1% last year. Annual revenue reached $10.6B, up 10.1%, and gross margin was 57.4%.
what just happened
Last quarter delivered $2.59 EPS, beating the $2.25 estimate by 15.11%, but the market cares more about the soft U.S. backdrop.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
90/100 earnings predictability — you can trust these numbers
16.4x trailing p/e — the market's not buying it — or you found a deal
30.0% return on capital — every dollar works hard here
xvary composite: 61/100 — average
What they do
Lululemon sells premium workout clothes and accessories through 767 stores and its website.
This brand still gets people to pay premium prices for leggings and jackets in a category full of lookalikes. You see it in the numbers: a 28.0% operating margin (money left after running the business) is rich for apparel, and return on capital is 30.0% (profit on money invested) so each dollar put to work still earns back 30 cents. That only happens when your customer reaches for your logo first.
How they make money
$10.6B
annual revenue · their business grew +10.1% last year
total revenue
$10.6B
+10.1%
The products that matter
designs and sells activewear
Premium Activewear
$7.5B revenue · recent growth 4.2%
it's the entire $7.5B business. Last year's 52.4% growth tells you how fast this brand scaled. The more recent 4.2% pace tells you why the stock stopped getting the premium treatment.
entire business
Key numbers
90
earnings predictability
That score says profits have usually followed a steady script. So what: this is not normally a fashion roulette wheel.
28.0%
operating margin
Operating margin means profit after running the business. So what: Lululemon keeps 28 cents of every sales dollar before interest and taxes.
30.0%
return on capital
Return on capital means profit earned on money invested in the business. So what: management still turns investment dollars into profits unusually well.
16.4x
trailing p/e
P/E means price divided by last year's earnings. So what: you are paying 16.4 years of trailing profit for a brand that used to command a richer multiple.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- net profit margin 13.2% — keeps 13 cents of every dollar in revenue
- return on equity 30% — $0.30 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in LULU 3 years ago → it's now worth $6,520.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Last quarter delivered $2.59 EPS, beating the $2.25 estimate by 15.11%, but the market cares more about the soft U.S. backdrop.
Annual revenue reached $10.6B, up 10.1%, and gross margin was 57.4%. Deadpan fact bomb: the latest quarter also showed revenue of $7.5B, up 191% vs. prior year, which tells you the comparison period was doing gymnastics.
$7.5B
revenue
$2.59
eps
57.4%
gross margin
the number that mattered
The 5% Americas comparable-sales decline mattered most because China grew 46%, but the U.S. still sets the mood for this stock.
-
comparable sales in the americas fell 5%, and gross margins were pressured by higher markdowns and an initial tariff impact.
-
the turnaround plan focuses on a ‘‘product engine’’ reset, targeting 35% new style penetration by spring 2026 and shortening development cycles from 18-24 months to 12-14 months to improve agility.
-
the near-term outlook leaves much to be desired.fourth-quarter gross margins are projected to contract by 580 basis points vs. prior year, driven largely by a $210 million (410 basis point) impact from new tariffs and the removal of the de minimis exemption.
-
despite these pressures, china remains a bright spot, with revenue surging 46%.
-
we maintain a cautious stance on the company’s long-term prospects.core customers are increasingly shifting toward more agile competitors such as alo yoga and vuori, which are capturing market share with fresher designs.
source: company earnings report, 2026
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What could go wrong
the #1 risk is americas demand softening while lululemon has to discount more product.
med
americas traffic and markdown pressure
Comparable sales in the americas fell 5%. That is the home market wobbling. When the core region slows and markdowns rise at the same time, premium pricing power starts looking less premium.
If this persists, the 24.0% operating margin is too high for the market to trust.
med
tariffs and de minimis changes
Management projected a 580-basis-point gross margin contraction for the quarter. Of that, $210M and 410 basis points are tied to new tariffs and the removal of de minimis treatment.
This is a direct hit to gross profit, not a vague macro concern. You can model it.
med
brand freshness versus alo and vuori
Lululemon's moat is brand and product relevance. That works until it doesn't. Management is now pushing for 35% new style penetration, which tells you design freshness has become a board-level issue.
If fresher assortments do not translate into better sell-through, growth can stay stuck near the recent 4.2% pace.
med
securities litigation
A class action lawsuit filed in july 2024 accuses lululemon of misleading investors. We are not assigning a dollar impact here because the page does not provide one.
The bigger issue is distraction and credibility at the exact moment management needs investors focused on the operating reset.
If Americas weakness, heavier markdowns, and the projected 580-basis-point margin hit show up together for more than a quarter, this stops looking like a temporary stumble and starts looking like a lower-margin growth story.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next report in march
Watch whether the projected 580-basis-point gross margin hit lands as guided or worse. That will tell you how much of this reset is operational and how much is just math.
metric
americas comparable sales
The stock does not need perfection. It does need something better than -5% in the core geography.
trend
china versus the rest of the business
China grew 46%. Great. If that becomes the only clean growth line, the business mix starts carrying more execution risk than the headline suggests.
risk
product reset actually showing up
Management is targeting 35% new style penetration. You want proof that fresher product reduces markdown pressure, not just a better sounding strategy slide.
Analyst rankings
short-term outlook
average
Momentum score 3. In human-speak, analysts do not see a strong near-term signal either way.
risk profile
average
Stability score 3 means middle-of-the-pack risk. Not a bunker stock. Not a falling knife by definition either.
chart momentum
bottom 5%
Technical score 5 is the weakest reading here. In human-speak, the chart still looks guilty until proven innocent.
earnings predictability
90 / 100
Management usually gives reliable guidance. The debate is not whether the numbers are real. It is whether they are slowing for longer than the market expects.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 427 buyers vs. 586 sellers in 3q2025. total institutional holdings: 85.4M shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$158
$362
$212
current price
$260
target midpoint · +22% from current · 3-5yr high: $290 (+35% · 8% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive