Lululemon Stock: A Downward Dog or a Comeback?

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Once upon a time—specifically on December 29, 2023—Lululemon (LULU) stock perched atop its Everest of $511.29, an all-time high. If you’d sunk $10,000 into its split-adjusted IPO price of $9 back in 2007, you’d have been sitting on a nest egg of $568,100. Not bad for a company that started out making yoga pants and somehow convinced people to pay $98 for them.

Fast-forward to today, and Lululemon’s stock price has limped to around $220, like a marathon runner who forgot to hydrate. Its growth in North America stalled, competitors sprang up like mushrooms after rain, and tariffs—those ever-delightful trade taxes—put extra weight on the balance sheet. Investors are now left wondering: has Lululemon’s moment passed, or is this just savasana before the next big move?

The Rise and Slow Deflation of a Yoga Empire

Lululemon, bless its unstretchable leggings, had a charmed run. It cornered the premium yoga apparel market back when yoga was still mostly just for hippies and Madonna. Then came athleisure—a term so ridiculous it could only be American—and suddenly everyone wanted to look like they were on their way to a spin class, even if their only workout was lifting a donut to their mouth.

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In 2019, Lululemon unveiled its “Power of Three” plan, a corporate-speak sorcery trick involving doubling digital revenue, doubling men’s revenue, and quadrupling international sales—all by 2024. Miraculously, it hit these goals early, pandemic closures notwithstanding. Emboldened, it rolled out “Power of Three x2” in 2022, another numerical incantation aimed at repeating the feat by fiscal 2026.

Yet, somewhere along the way, the spell wore off. Growth slowed. Women’s apparel sales in North America sagged, squeezed by a trifecta of thriftier shoppers, Kirkland-brand activewear hawked at Costco (COST), and aggressive upstarts like Alo Yoga and Vuori. Meanwhile, Amazon (AMZN) muscled in with its own private-label knockoffs, because nothing says “luxury yoga experience” like next-day delivery sweatpants made by algorithms.

Metric FY 2022 FY 2023 FY 2024
Total Revenue $8.1 billion $9.6 billion $10.6 billion
Revenue Growth 30% 19% 10%
Same-store sales Growth 16% 13% 4%

Lululemon kept launching new products—Glow Up leggings (because who doesn’t want iridescent thighs?), Daydrift, BeCalm—in an attempt to offset domestic sluggishness. But nothing quite captured the imagination like its early days. Then, as if the universe wanted to underscore the awkwardness, Sun Choe, Lululemon’s Chief Product Officer since 2018, abruptly resigned last year. Probably not during corporate yoga hour.

The Next Three Years: Om-ing for Stability

At Lululemon’s Q1 2025 earnings call, CEO Calvin McDonald didn’t mince words: he was “definitely not happy” with U.S. performance. Americans, it turned out, were being “cautious” and “discerning”—translation: unwilling to pay retail prices for leggings when rent and oat milk cost more than gold bars.

Still, McDonald insists the “Power of Three x2” plan holds. Fiscal 2026 revenue should hit $12.5 billion, though at an 8.6% growth trajectory from 2024—far cry from its heyday. Analysts, meanwhile, have downgraded their forecasts—expecting just 6%-7% annual growth, with EPS crawling along like a hungover jogger. Overseas expansion is now Lululemon’s saving grace, while North America slowly drowns in a sea of discount activewear.

The Verdict: From Growth Stock to Background Noise

At 15 times earnings, Lululemon looks cheap. But then, so does a studio apartment in Manhattan—doesn’t mean it’s a bargain. With core markets saturated and the athleisure boom plateauing, it’s unlikely we’ll see another moonshot (or even a sun salutation) anytime soon. The party’s over—at least until Lululemon pulls another rabbit (or unicorn) out of its yoga mat 🧘‍♀️.

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2025-07-31 14:49