Lululemon Athletica Inc (NASDAQ:LULU) trades around $207.15, after bouncing from a day range of roughly $204.50–$209.21, versus a 52-week range of $159.25–$423.32 and a market cap near $24.06B. The share price is still down roughly 50–60% from its $423.32 high, leaving the stock on a compressed forward P/E of about 14–15x, which is extremely low for a premium global brand still generating double-digit margins and strong free cash flow, and any re-rating back toward historical multiples would offer material upside from the current $207.15 level.
Real-time price and full tape: NASDAQ:LULU live – https://www.tradingnews.com/Stocks/LULU/real_time_chart
Revenue slowdown from hyper-growth to single-digit expansion at NASDAQ:LULU
Over the last cycle, revenue for NASDAQ:LULU decelerated sharply from 42% growth in FY22 and 29% in FY23 to roughly ~10% in FY25, with FY26 expected to deliver only marginal positive growth, which explains why the market punished the stock from above $400 to just over $200. Q3 FY25 revenue came in at $2.56B, up 6.7% year-on-year and beating expectations by about $80M, while full-year FY25 guidance of $10.96–$11.05B implies around 4% reported growth, or 5–6% once you adjust for the prior year’s extra 53rd week, confirming that LULU is still growing but no longer in hyper-growth mode.
Americas weakness versus 33% international surge for NASDAQ:LULU
The growth deceleration is heavily skewed to the Americas, while the international segment remains robust and is now the primary engine for NASDAQ:LULU. In Q3 FY25, Americas revenue fell 2% YoY, with the US down 3% YoY and Americas comps down 5%, as traffic softened after Thanksgiving and discounting increased to clear slow-moving inventory, which is consistent with a mature, competitive market around the current $207.15 share price level. In contrast, international revenue jumped 33% YoY, driven by Mainland China sales up 46% YoY, and management now guides China FY25 growth at or above the high end of 20–25%, with China representing about 17% of trailing twelve-month revenue, supported by a global store base of 796 locations and 12% growth in square footage.
Vertical premium model, outsourced production and historical margin strength
NASDAQ:LULU continues to run a vertical, high-control business model in which product design, fabric innovation, merchandising and brand are owned internally, while production is outsourced to low-cost manufacturing partners in hubs such as Vietnam and other Asian suppliers, allowing Lululemon to preserve its premium positioning while keeping capital intensity relatively low. Historically this translated into best-in-class economics, with normalized gross margin around 58.4%, net margin near 16.4%, and capital returns of roughly 42.4% ROE and 41.8% ROCE, which are extremely high figures for a consumer brand and do not match a stock that has been cut to about $207.15 and just ~14–15x forward earnings.
Macro squeeze on premium discretionary demand hitting NASDAQ:LULU
The core markets for NASDAQ:LULU, mainly the US and Canada, have faced persistent inflation and real-income pressure, which undermines demand for premium discretionary categories such as high-end athleisure. In that context, consumers have been trading down from Lululemon’s premium price points to cheaper alternatives, which is visible in the share price collapse from $423.32 at the peak to around $207.15 today, and in the slowdown of growth from above 40% to the single-digit area, indicating that macro pressure is a key driver of the derating rather than a broken brand.
Execution mistakes: stale assortments, weak US women’s and heavier discounting
Beyond macro, management admitted execution gaps that amplified the slowdown in NASDAQ:LULU. Product life cycles were kept too long, creating stale assortments, and there was not enough seasonal newness in colors, prints and patterns, which hurt traction especially in the US women’s business where LULU historically dominated. In a market where competitors such as Nike, Alo Yoga, Athleta and Vuori constantly refresh product, these missteps forced deeper markdowns, compressed gross margin from the high-50s toward 55.6% in Q3, and contributed to the sentiment that pushed the stock down into the $200 area.
Tariffs, de minimis removal and a $320M profit headwind for NASDAQ:LULU
The regulatory shock around tariffs and de minimis removal is a central part of the bear case for NASDAQ:LULU. Previously, Lululemon imported finished goods into Canada duty-free under USMCA and then shipped many US ecommerce orders as sub-$800 parcels, exploiting the de minimis duty exemption to protect profitability. In July 2025, the US effectively closed that route by imposing 16–25% duties on those imports, and management now estimates a profit impact of approximately $190–210M in FY25 and about $320M in 2026, which is already flowing through to margins and helps explain why a business trading at $207.15 with strong brand equity is valued at only ~14x forward earnings.
Current margin profile and free cash flow power at NASDAQ:LULU
Even after the tariff shock and discounting wave, NASDAQ:LULU still operates with an attractive margin and cash profile compared to other global apparel names. FY25 guidance implies around 270 basis points of gross margin compression versus 2024 and around 70 bps higher markdowns, yet the company still sits near 55–56% gross margin and mid-teens net margin, with a free-cash-flow yield around 5.4% at roughly $207.15 per share. That combination of high underlying profitability and modest valuation multiple means LULU can continue to invest in innovation, store growth and marketing while still maintaining room for buybacks or further shareholder returns when visibility improves.
Management transition, founder pressure and sentiment shift for NASDAQ:LULU
Leadership is changing at NASDAQ:LULU just as the stock tries to build a floor near the $200 line. Calvin McDonald will step down as CEO on January 31, 2026, with Meghan Frank and Andre Maestrini acting as co-CEOs during the search, following public criticism from founder Chip Wilson, who argued the company drifted away from innovation and core performance customers in favor of short-term Wall Street appeasement. Under McDonald, revenue essentially tripled from 2018 to 2025 and EPS compounded at roughly 20%, but that run ended with the current slowdown and derating, and the share price reaction to Q3 results – an immediate jump from the $160s toward $200+ – shows that the market views the CEO transition and a refocus on product as a potential positive rather than a threat at the current $207.15 valuation.
