Lululemon Shares Plunge 78% from Peak
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 9 hours ago
0mins
Source: Fool
- Stock Price Plunge: Lululemon's shares have fallen 78% from their December 2023 peak, indicating a significant loss of market confidence in its growth prospects, prompting investors to carefully assess its investment value.
- Strong Profitability: Despite challenges, Lululemon reported a gross margin of 54.2% in the last fiscal quarter, showcasing its competitive advantage in the premium market, which may lay the groundwork for future recovery.
- Poor Market Performance: In Q1 of fiscal year 2026, Lululemon's revenue grew only 4%, with U.S. sales down 4%, primarily due to increased competition and inflationary pressures, reflecting the challenges it faces in the market.
- Long-Term Growth Potential: Although the stock has plummeted in the short term, Lululemon still possesses long-term growth potential in the Chinese market, making it a consideration for patient investors willing to hold for five years or longer.
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Analyst Views on LULU
Wall Street analysts forecast LULU stock price to rise
22 Analyst Rating
1 Buy
21 Hold
0 Sell
Hold
Current: 116.400
Low
146.00
Averages
207.12
High
303.00
Current: 116.400
Low
146.00
Averages
207.12
High
303.00
About LULU
lululemon athletica inc. is a technical athletic apparel, footwear, and accessories company. The Company organizes its operations into four regional markets: the Americas, China Mainland, Asia Pacific (APAC), and Europe and the Middle East (EMEA). It conducts its business through a number of different channels in each market, including the Company-operated stores, e-commerce, temporary locations, wholesale, outlets, a re-commerce program, and license and supply arrangements. The Company offers a comprehensive line of technical athletic apparel, footwear, and accessories marketed under the lululemon brand. Its apparel assortment includes items such as shorts, tops, and jackets designed for a healthy lifestyle, including athletic activities such as yoga, running, training, and most other activities. It also offers apparel designed for being on the move and fitness-inspired accessories. It operates stores in the United States, Canada, China Mainland, Australia, South Korea and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Earnings Performance: Nike's fiscal Q4 2026 report revealed flat full-year revenue and a 1% decline in Q4 revenue, with wholesale revenue up 4% year-over-year while direct-to-consumer sales fell 7%, indicating a complex market demand landscape.
- Gross Margin Improvement: Thanks to refunded tariffs, Nike's gross margin increased by 8.9 percentage points to 49.2%, with earnings per share at $0.72, including a $0.52 benefit from tariffs, significantly up from $0.14 last year, showcasing effective cost control measures.
- Market Reaction: Although the stock initially dropped post-report, Nike's shares have since risen by 4%, reflecting positive investor sentiment towards the easing of tariff issues and a gradual restoration of confidence in the company's future.
- Strategic Adjustments: Under new CEO leadership, Nike has begun reversing its wholesale challenges and restructuring operations to regain its innovative spirit; despite facing inflation and shifts in global shopping behaviors, the company is tightening inventory and expects further gross margin improvements.
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- Earnings Highlights: Nike's fiscal Q4 2026 report showed flat full-year revenue and a 1% decline in quarterly revenue; however, gross margin improved by 8.9 percentage points to 49.2% due to tariff refunds, with earnings per share at $0.72, indicating resilience amid challenges.
- Market Reaction: Despite an 11% drop in June, Nike's stock rebounded 4% post-earnings report, reflecting positive market sentiment regarding the easing of tariff pressures and restoring investor confidence in the company's future.
- North American Performance: While sales in China fell by 17%, North American wholesale revenue increased by double digits, demonstrating Nike's strong performance in the region and its ability to capitalize on market opportunities following strategic adjustments.
- Strategic Adjustments: By appointing a new CEO and restructuring operations, Nike is refocusing on innovation and speed to market; despite challenges from inflation and changing global shopping behaviors, the company is tightening inventory and improving gross margins, showcasing recovery potential.
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- Stock Price Plunge: Lululemon's shares have fallen 78% from their December 2023 peak, indicating a significant loss of market confidence in its growth prospects, prompting investors to carefully assess its investment value.
- Strong Profitability: Despite challenges, Lululemon reported a gross margin of 54.2% in the last fiscal quarter, showcasing its competitive advantage in the premium market, which may lay the groundwork for future recovery.
- Poor Market Performance: In Q1 of fiscal year 2026, Lululemon's revenue grew only 4%, with U.S. sales down 4%, primarily due to increased competition and inflationary pressures, reflecting the challenges it faces in the market.
- Long-Term Growth Potential: Although the stock has plummeted in the short term, Lululemon still possesses long-term growth potential in the Chinese market, making it a consideration for patient investors willing to hold for five years or longer.
See More
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- Attractive Valuation: Lululemon's forward price-to-earnings ratio stands at 10.6, significantly lower than the S&P 500's multiple, indicating investment appeal despite a staggering 78% drop from its December 2023 peak.
- Slowing Revenue Growth: For the first quarter of fiscal 2026, Lululemon reported only a 4% revenue increase, with U.S. sales down 4%, primarily due to intensified competition, disappointing product launches, and inflationary pressures, highlighting the challenges the company faces.
- Strong Profitability: Despite these challenges, Lululemon reported a gross margin of 54.2% in the last fiscal quarter, showcasing its competitive advantage and profitability, indicating that the brand's position in the premium market remains robust.
- Long-Term Growth Potential: Analysts suggest that despite the current stock performance, Lululemon's long-term growth potential, particularly in the Chinese market, warrants attention from patient investors willing to hold for five years or more.
See More
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- Margin Outlook: Although management anticipates a return to gross margin expansion by Q2 of fiscal 2027, the gross margin has fallen by 250 basis points to 41% due to tariff impacts and inventory clearance, which will continue to exert pressure on future profitability.
- Executive Transition Risk: CFO Matthew Friend will step down on August 17, replaced by David Denton, former CFO of Pfizer, and such management changes may signal internal issues within the company, prompting investors to remain cautious.
- Intensifying Market Competition: Nike faces increasing competition from brands like On Holding and Deckers, compounded by nationalistic consumer sentiment and declining wholesale demand in China, with revenue in Greater China expected to drop by 20%, further impacting the company's market share and growth prospects.
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- Management Changes: CFO Matthew Friend will step down on August 17, replaced by former Pfizer CFO David Denton, raising investor concerns about the company's strategic direction, especially given its poor performance.
- Pessimistic Market Expectations: Nike anticipates a 2%-4% revenue decline in Q4, with Greater China expected to see a 20% drop due to reduced wholesale demand and marketplace reset actions, highlighting the company's struggles to regain growth.
- Dividend and Profit Pressure: Although Nike offers a nearly 4% dividend yield, the significant profit decline makes it challenging to fund the dividend entirely from earnings, necessitating a clear path to profit stabilization and growth to reassure investors about the dividend's safety and support stock recovery.
See More
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- Earnings Performance: Nike's fiscal Q4 2026 report revealed flat full-year revenue and a 1% decline in Q4 revenue, with wholesale revenue up 4% year-over-year while direct-to-consumer sales fell 7%, indicating a complex market demand landscape.
- Gross Margin Improvement: Thanks to refunded tariffs, Nike's gross margin increased by 8.9 percentage points to 49.2%, with earnings per share at $0.72, including a $0.52 benefit from tariffs, significantly up from $0.14 last year, showcasing effective cost control measures.
- Market Reaction: Although the stock initially dropped post-report, Nike's shares have since risen by 4%, reflecting positive investor sentiment towards the easing of tariff issues and a gradual restoration of confidence in the company's future.
- Strategic Adjustments: Under new CEO leadership, Nike has begun reversing its wholesale challenges and restructuring operations to regain its innovative spirit; despite facing inflation and shifts in global shopping behaviors, the company is tightening inventory and expects further gross margin improvements.
See More
Nike Surprises with Earnings Beat, Stock Rebounds
- Earnings Highlights: Nike's fiscal Q4 2026 report showed flat full-year revenue and a 1% decline in quarterly revenue; however, gross margin improved by 8.9 percentage points to 49.2% due to tariff refunds, with earnings per share at $0.72, indicating resilience amid challenges.
- Market Reaction: Despite an 11% drop in June, Nike's stock rebounded 4% post-earnings report, reflecting positive market sentiment regarding the easing of tariff pressures and restoring investor confidence in the company's future.
- North American Performance: While sales in China fell by 17%, North American wholesale revenue increased by double digits, demonstrating Nike's strong performance in the region and its ability to capitalize on market opportunities following strategic adjustments.
- Strategic Adjustments: By appointing a new CEO and restructuring operations, Nike is refocusing on innovation and speed to market; despite challenges from inflation and changing global shopping behaviors, the company is tightening inventory and improving gross margins, showcasing recovery potential.
See More
Lululemon Shares Plunge 78% from Peak
- Stock Price Plunge: Lululemon's shares have fallen 78% from their December 2023 peak, indicating a significant loss of market confidence in its growth prospects, prompting investors to carefully assess its investment value.
- Strong Profitability: Despite challenges, Lululemon reported a gross margin of 54.2% in the last fiscal quarter, showcasing its competitive advantage in the premium market, which may lay the groundwork for future recovery.
- Poor Market Performance: In Q1 of fiscal year 2026, Lululemon's revenue grew only 4%, with U.S. sales down 4%, primarily due to increased competition and inflationary pressures, reflecting the challenges it faces in the market.
- Long-Term Growth Potential: Although the stock has plummeted in the short term, Lululemon still possesses long-term growth potential in the Chinese market, making it a consideration for patient investors willing to hold for five years or longer.
See More
Lululemon Stock Plummets, Yet Long-Term Potential Remains
- Attractive Valuation: Lululemon's forward price-to-earnings ratio stands at 10.6, significantly lower than the S&P 500's multiple, indicating investment appeal despite a staggering 78% drop from its December 2023 peak.
- Slowing Revenue Growth: For the first quarter of fiscal 2026, Lululemon reported only a 4% revenue increase, with U.S. sales down 4%, primarily due to intensified competition, disappointing product launches, and inflationary pressures, highlighting the challenges the company faces.
- Strong Profitability: Despite these challenges, Lululemon reported a gross margin of 54.2% in the last fiscal quarter, showcasing its competitive advantage and profitability, indicating that the brand's position in the premium market remains robust.
- Long-Term Growth Potential: Analysts suggest that despite the current stock performance, Lululemon's long-term growth potential, particularly in the Chinese market, warrants attention from patient investors willing to hold for five years or more.
See More
Nike Expected to Report Eighth Straight Quarter of Declining Profits
- Profit Decline: Nike is expected to report its eighth consecutive quarter of declining profits, with revenue rising only 1% in the first three quarters and earnings per share down 32% to $1.38, indicating significant operational challenges amid fierce competition and weak consumer spending.
- Margin Outlook: Although management anticipates a return to gross margin expansion by Q2 of fiscal 2027, the gross margin has fallen by 250 basis points to 41% due to tariff impacts and inventory clearance, which will continue to exert pressure on future profitability.
- Executive Transition Risk: CFO Matthew Friend will step down on August 17, replaced by David Denton, former CFO of Pfizer, and such management changes may signal internal issues within the company, prompting investors to remain cautious.
- Intensifying Market Competition: Nike faces increasing competition from brands like On Holding and Deckers, compounded by nationalistic consumer sentiment and declining wholesale demand in China, with revenue in Greater China expected to drop by 20%, further impacting the company's market share and growth prospects.
See More
Nike Faces Sales Decline and Management Changes Ahead of Earnings Report
- Sales Decline: Nike's revenue has only risen 1% over the past three quarters, while profits have plummeted, with gross margins falling 250 basis points to 41%, indicating severe market challenges amid intense competition and weak consumer spending.
- Management Changes: CFO Matthew Friend will step down on August 17, replaced by former Pfizer CFO David Denton, raising investor concerns about the company's strategic direction, especially given its poor performance.
- Pessimistic Market Expectations: Nike anticipates a 2%-4% revenue decline in Q4, with Greater China expected to see a 20% drop due to reduced wholesale demand and marketplace reset actions, highlighting the company's struggles to regain growth.
- Dividend and Profit Pressure: Although Nike offers a nearly 4% dividend yield, the significant profit decline makes it challenging to fund the dividend entirely from earnings, necessitating a clear path to profit stabilization and growth to reassure investors about the dividend's safety and support stock recovery.
See More
