Product Refresh And Global Expansion Will Empower Future Market Leadership

Lululemon athletica’s analyst fair value target has been lowered to approximately $195.84 from $198.36. Analysts cite growing concerns over U.S. sales headwinds, increased competitive pressures, and a subdued earnings outlook, despite relatively stable profit margins.

Analyst Commentary

Recent Street research reveals a broad shift in tone among analysts regarding lululemon athletica's prospects, with the majority now expressing caution in their outlooks. Despite the range of views, several consistent themes have emerged in both bullish and bearish directions as analysts assess the company's valuation, growth trajectory, and execution capabilities.

• Bullish analysts continue to highlight lululemon's industry-leading sales productivity and high margins, which remain well ahead of many peers and support relative valuation strength.
• Some analysts view the recent sharp decline in the stock’s valuation as creating a particularly attractive entry point, arguing that current prices are at historic lows relative to earnings multiples.
• There is hope that recent "clear the deck" actions, such as revised guidance and product resets, could position lululemon for improvement once macro headwinds and U.S. sales challenges begin to ease.
• A select group of analysts, while reducing estimates, still sees the company consistently outperforming the broader apparel sector if it can recapture brand momentum and navigate the tariff changes effectively.

• Bearish analysts warn of mounting downside risk to both sales and earnings, noting that consensus growth expectations for 2026 may be far too optimistic given the company’s declining U.S. performance and tougher competitive environment.
• Many point to heightened uncertainty around the timing and strength of a turnaround, with recent quarters showing decelerating North American sales and a lack of near-term catalysts.
• Analysts remain concerned about the impact of expired tariff exemptions and corrective measures, as well as a "stale" product assortment that may require significant time to refresh.
• Several research notes highlight that continued earnings revisions and margin pressures represent significant headwinds, challenging the ability to maintain premium valuation multiples in the near term.

What's in the News

• Citi has lowered its price target for Lululemon athletica to $220 from $270, maintaining a Neutral rating. The firm anticipates a small Q2 earnings beat accompanied by a guidance cut due to higher tariffs (Citi).
• Lululemon revised its full-year 2025 guidance and now expects net revenue of $10.850 billion to $11.000 billion, with diluted earnings per share between $12.77 and $12.97. The outlook reflects an estimated $240 million reduction in gross profit due to increased tariffs and the removal of the de minimis exemption.
• For Q3 2025, Lululemon projects net revenue between $2.470 billion and $2.500 billion, and diluted earnings per share in the range of $2.18 to $2.23, assuming a tax rate of approximately 30.5%.
• Between May and August 2025, Lululemon repurchased approximately 1.53 million shares for $349.05 million. This completes a buyback of over 7.5 million shares announced in December 2023.
• The company is set to open its first store in Italy in Milan's iconic shopping district on July 19, 2025. This marks continued international expansion with a 5,700-square-foot location featuring both men's and women's collections.

Valuation Changes

• Consensus Analyst Price Target: The fair value estimate has declined slightly from $198.36 to $195.84.
• Discount Rate: The discount rate has increased marginally from 8.06% to 8.14%.
• Revenue Growth: Expected annual revenue growth has edged down from 5.17% to 5.13%.
• Net Profit Margin: Projected net profit margin has increased marginally from 14.62% to 14.64%.
• Future P/E: The anticipated future price-to-earnings ratio has decreased slightly from 14.71x to 14.56x.