Product Refresh And Global Expansion Will Empower Future Market Leadership

Analysts have trimmed Lululemon's price target from $202.60 to $198.36, citing intensifying U.S. competition, weaker domestic sales momentum, tariff-related headwinds, and concerns over product freshness and growth outlook despite otherwise reasonable valuations.

Analyst Commentary

• Bearish analysts see intensifying competition in the athleticwear space, particularly in the U.S., with Lululemon's domestic business showing declining sales growth, lack of positive catalysts, and brand momentum concerns.
• Earnings outlooks and guidance have been repeatedly cut following mixed Q2 results, with consensus FY26 estimates viewed as too high and heightened uncertainty around growth and margin trajectory overshadowing otherwise reasonable valuations.
• The elimination of the de minimis tariff exemption and ongoing tariff impacts represent a more significant headwind than previously anticipated, creating greater risk to near- and long-term EPS and company guidance.
• Product assortment is perceived as "stale," with key performance indicators deteriorating, a muted outlook for China, and macroeconomic headwinds in international markets contributing to a more cautious stance among analysts.
• Bullish analysts highlight the stock’s low valuation levels and see long-term opportunity if Lululemon can execute a turnaround, but are waiting for clear evidence of a U.S. sales recovery, improved assortment, and resolution of external pressures before recommending shares more aggressively.

What's in the News

• Citi lowered its price target on Lululemon to $220 from $270, maintaining a Neutral rating and noting expectations of a small Q2 earnings beat but a guidance cut due to higher tariffs, with a still cautious earnings outlook (Citi/Periodicals).
• The company issued Q3 2025 guidance for net revenue of $2.47–2.5 billion (3–4% growth) and diluted EPS of $2.18–$2.23, assuming a 30.5% tax rate (Key Developments).
• Revised full-year 2025 guidance projects net revenue of $10.85–$11.0 billion (2–4% growth) and EPS of $12.77–$12.97, reflecting an estimated $240 million gross profit reduction primarily driven by higher tariffs and regulatory changes, with assumptions built in for mitigation efforts (Key Developments).
• Lululemon continued international expansion with the opening of its first store in Milan, Italy, emphasizing innovative store design and integrated omni-channel experiences (Key Developments).
• The company was added to several Russell value and midcap benchmarks while being dropped from the Russell Top 200 Growth Benchmark, indicating a notable shift in index classification (Key Developments).

Valuation Changes

Summary of Valuation Changes for lululemon athletica

• The Consensus Analyst Price Target has fallen slightly from $202.60 to $198.36.
• The Consensus Revenue Growth forecasts for lululemon athletica remained effectively unchanged, at 5.2% per annum.
• The Future P/E for lululemon athletica remained effectively unchanged, moving only marginally from 14.61x to 14.71x.