Last Update 08 Nov 25

LULU: Future NFL Apparel Partnership Will Drive Renewed Brand Momentum

Analysts have lowered their average price target on lululemon athletica by a significant margin. They cite persistent U.S. headwinds, tariff impacts, and increasing uncertainty around the company's growth and earnings visibility in the near term.

Analyst Commentary

Recent Street research on lululemon athletica reflects a notable shift in sentiment, with analysts issuing a range of cautious updates. The feedback highlights both positive aspects and areas of concern relating to the company’s growth trajectory, competitive positioning, and valuation.

Bullish Takeaways

Some bullish analysts maintain a positive outlook on lululemon’s long-term growth potential. They suggest the stock’s recent selloff and lower valuation may offer an attractive entry point for investors who believe in the brand’s resilience.
Opportunities tied to international expansion and the ability to mitigate tariff impacts have led to incremental increases in future earnings estimates from select analysts. This is particularly the case when management executes successful cost-saving or growth initiatives.
The company’s strong brand and historical outperformance in sales per square foot and margins are cited as foundational assets. These could underpin a recovery if consumer engagement improves and new product launches resonate.
A few analysts suggest that value could emerge as market expectations reset, which could pave the way for re-rating if lululemon can deliver on upcoming growth targets.

Bearish Takeaways

Bearish analysts flag concerns over declining U.S. trends. They note that mounting competition and macroeconomic headwinds threaten both growth and earnings visibility in the near term.
Recent partnerships and strategic moves are viewed with skepticism, raising questions about clarity of vision and the risk to the brand’s premium positioning.
A series of price target reductions and downgrades cite heightened uncertainty around the timing of a turnaround in key markets, especially the U.S., and a lack of near-term catalysts that would drive sustained upside.
There is widespread caution regarding margin contraction due to tariff pressures and the end of beneficial exemptions. Analysts are also concerned that consensus earnings estimates for 2025 and 2026 may remain too optimistic given external shocks and slower demand.

What's in the News

Lululemon has signed its first partnership with the NFL and Fanatics to launch a new fan apparel collection. Shares rose in pre-market trading after the announcement (Bloomberg).
Citi has lowered its price target for Lululemon from $270 to $220, maintaining a Neutral rating. The bank expects a small earnings beat for Q2 but has cut guidance due to tariff impacts (Citi).
The company issued earnings guidance for Q3 2025, expecting net revenue between $2.470 and $2.500 billion. This reflects year-over-year growth of 3% to 4%. Projected diluted earnings per share are between $2.18 and $2.23.
Lululemon revised its full-year 2025 outlook, guiding for net revenue of $10.850 to $11.000 billion. The outlook was impacted by higher tariffs and the removal of the de minimis exemption, with an estimated $240 million reduction in gross profit.
From May to August 2025, the company completed a share repurchase of 1.27% of its shares for $349.05 million. This brings total repurchases under the current program to 6.15% of shares for $2.21 billion.

Valuation Changes

Fair Value Estimate: Remains unchanged at $194.36 per share.
Discount Rate: Increased slightly from 8.12% to 8.25%.
Revenue Growth: Remained flat, moving minimally from 5.06% to 5.06%.
Net Profit Margin: Marginally decreased from 14.18% to 14.17%.
Future P/E Ratio: Increased moderately from 14.94x to 14.99x.

Revamped product strategy and agile supply chain processes are set to drive revenue growth and boost conversion in core and international markets.
Investments in digital, AI, and omnichannel initiatives aim to enhance customer experience and operational efficiency, supporting long-term demand and margin stability.
Intensifying tariffs and competition, declining U.S. performance, maturing brand power, and shifting consumer trends threaten Lululemon's revenue growth, margins, and market leadership.

Catalysts

About lululemon athletica

Designs, distributes, and retails technical athletic apparel, footwear, and accessories for women and men under the lululemon brand in the United States, Canada, Mexico, China Mainland, Hong Kong, Taiwan, Macau, and internationally.What are the underlying business or industry changes driving this perspective?

The company is implementing a significant reset in its product approach, increasing the share of new styles in its assortment from 23% to 35% by Spring 2026, and investing in faster, more agile design and supply chain processes; these actions are expected to revitalize core categories, drive higher conversion, and support a reacceleration in U.S. and global revenue growth.
International expansion remains a robust growth driver, with revenue in China up 25% and Rest of World up 19% this quarter; the company is early in international market penetration and is targeting continued double-digit store growth and entry into new markets, providing a multi-year runway for topline revenue and eventual margin expansion as scale increases.
Ongoing investments in digital commerce, technology (including new AI initiatives), and omnichannel capabilities aim to enhance customer personalization and operational agility, which should better capture shifting consumer behaviors and support both revenue growth and margin efficiency.
Strength in performance apparel and the company's ability to continue gaining market share in this higher-margin, innovation-driven segment aligns well with continued global adoption of health, wellness, and premium lifestyle trends, sustaining long-term demand, pricing power, and brand loyalty-positively impacting both revenue and net margins.
Cost mitigation strategies in response to new tariffs and the removal of the de minimis exemption-including selective price increases, vendor negotiations, and supply chain optimization-are expected to lessen pressure on gross margins in 2026 and beyond, helping stabilize free cash flow and earnings despite near-term headwinds.

lululemon athletica Earnings and Revenue Growth

lululemon athletica Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming lululemon athletica's revenue will grow by 5.4% annually over the next 3 years.
Analysts assume that profit margins will shrink from 16.4% today to 14.5% in 3 years time.
Analysts expect earnings to reach $1.9 billion (and earnings per share of $16.71) by about September 2028, up from $1.8 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $2.2 billion in earnings, and the most bearish expecting $1.5 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.9x on those 2028 earnings, up from 11.0x today. This future PE is lower than the current PE for the US Luxury industry at 19.8x.
Analysts expect the number of shares outstanding to decline by 3.41% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.05%, as per the Simply Wall St company report.

lululemon athletica Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Lululemon is facing significant pressures from increased tariffs and the removal of the de minimis provision, which are expected to reduce gross and operating margins by approximately 300–390 basis points in 2025 and have a $320 million mitigated annualized impact by 2026, limiting earnings growth unless mitigation strategies (pricing, vendor negotiations, expense actions) are highly successful.
The U.S. business, representing a large portion of revenue, is experiencing a decline (1–2% for 2025) with underperforming core casual/lifestyle categories, decreased guest frequency and conversion, and growing fatigue in key product franchises, posing risks to long-term revenue and gross margin if category innovation does not rapidly succeed.
Lululemon's brand is maturing in core markets, making it harder to command a premium and necessitating heavier reliance on newness and innovation; if efforts to reset product cycles and accelerate trend creation in casual/lifestyle fall short, the company could see further compression in gross margin due to higher markdowns and promotional activity.
Heightened industry competition, with many new entrants and established brands now offering similar athleisure and performance apparel, is intensifying promotional pressures and could erode Lululemon's market share and pricing power, contributing to slower revenue growth and further margin compression.
Macro headwinds, including increasing consumer selectivity, rising discretionary spending in experiences vs. goods, and slower apparel spending in both the U.S. and Tier 1 Chinese cities, suggest secular category growth could normalize or decelerate post-pandemic, risking long-term revenue growth and overall earnings expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $206.168 for lululemon athletica based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $303.0, and the most bearish reporting a price target of just $100.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.8 billion, earnings will come to $1.9 billion, and it would be trading on a PE ratio of 14.9x, assuming you use a discount rate of 8.1%.
Given the current share price of $165.69, the analyst price target of $206.17 is 19.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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