Earnings Preview: Can Lululemon's Results Revive Its Slumping Stock?

Moomoo News Global wrote a column · Jun 3 16:55

$Lululemon Athletica (LULU.US)$ is scheduled to release its financial results post-market on June 5 ET. Analysts estimate the company to post revenue of USD2.36B for FY2026Q1, up 6.80% YOY; EPS is estimated to be USD2.585, up 1.77% YOY.

The Vancouver, Canada-based company has exceeded Wall Street's earnings expectations for four consecutive quarters. However, shares of LULU have declined 15.55% in 2025, lagging behind both the US and Canadian stock market.

Earnings Preview: Can Lululemon's Results Revive Its Slumping Stock?

● Lululemon's stock plummeted after the last earnings report

After reporting a stronger-than-expected Q4 2024 EPS of $6.14 and revenue of $3.6 billion on Mar. 27, Lululemon shares plunged 14.2% due to weak forward guidance and macroeconomic concerns. Management projected Q1 2025 growth of just 6% - 7%. Full-year 2025 revenue guidance of $11.2 billion - $11.3 billion came in below analysts’ expectations.

Additionally, flat U.S. comparable store sales and management's comments about reduced consumer spending and slower U.S. traffic due to inflation heightened investor concerns.

● Investors should closely monitor the following indicators:

1. Store count and comparable sales growth

Lululemon's year-over-year growth rate per store has decreased from over 20% at its peak to 3% in Q4 FY2025. As comparable sales slow down, the number of stores has become the main driver of growth in offline sales. Analysts expect the growth rate for same-store sales in Q1 FY2026 to be 2.43%, with potential for further decline.

2. Revenue by region

The slowdown in U.S. sales last quarter was one of the key factors in the stock price plunge. Currently, U.S. sales accounted for 78.4% in FY2024Q1 and 73.4% in FY2025Q1. Analysts expect the U.S. sales share to drop below 70% in FY2026Q1, while the sales share in China is expected to rise from last year's 13.8% to 16.2%.

In the U.S. yoga apparel segment, brands like Alo Yoga and Vuori have approximately 90% of Vuori's U.S. stores and 84% of Alo's stores located within a 0.5-mile radius of Lululemon stores. Over the past year, these two brands have each gained about 1 percentage point of market share in the U.S., eroding Lululemon's share.

Sales in China are also facing challenges. Lululemon's products are relatively less competitive in second and third-tier cities in China, where some local brands are capturing the mid-market with yoga pants priced between 500-800 RMB. Additionally, shifting production to countries like Vietnam and Cambodia has led to fluctuations in product quality. Many of Lululemon's fabrics still come from China, posing potential supply chain risks.

In Lululemon's product structure, women's products still make up the majority. 60% of men's apparel sales come from recommendations by female consumers, indicating a lack of independent purchasing intent among male customers. Additionally, Lululemon's performance in new categories such as golf and sneakers has not met expectations and has yet to develop a differentiated competitive edge.

3. Gross margin

Lululemon's gross profit margin has continued to increase in recent years. On the one hand, the gross profit margin in China is higher than in other regions. On the other hand, Lululemon continues to launch high-premium products, such as the Roksanda series co-branded with designers (priced at up to $998), and maintains its high-end positioning through functional fabrics (such as patented Luon).

The company's continuously increasing gross margin and net profit contrast sharply with its steadily declining stock price. In fact, Lululemon's P/E valuation has reached the 3.98 percentile of the past decade.

Historical data shows that Lululemon's stock price often fluctuates violently when it releases its financial report. Investors can use options tools for hedging the risk.

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

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三帆风顺 : confirmed

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105170675 : Follow example of United Health

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71426715 : Lululemon’s latest earnings drop was a perfect example of strong numbers overshadowed by weak forward guidance. $6.14 EPS and $3.6B in revenue should’ve been a win, but Wall Street’s not just looking at the present—it’s pricing in the future.

The 14% dip seems harsh at first glance, but when you dig into the details, the concerns feel more justified:
• Flat U.S. comps signal saturation, especially with intense competition from Alo Yoga and Vuori. If you’re seeing brand cannibalization within a 0.5-mile radius, that’s a red flag.
• China could be the lifeline, but it’s complicated. Tier 2/3 cities are price-sensitive and brand loyalty is still forming—hard to crack without localization. And if quality inconsistencies emerge due to outsourcing, that premium brand image gets blurry fast.

That said, it’s not all bad news:
• Margins are strong, and the brand still has one of the best gross margin profiles in retail.
• If China ramps up and men’s product lines gain real traction (beyond just female-driven purchases), that could offset some U.S. weakness.
• At current levels, the stock’s P/E is sitting at the 3.98 percentile of the last 10 years. For long-term investors, this may actually be an attractive entry—if you believe LULU can execute internationally and reenergize U.S. demand.

Personally, I’m on the fence. Might take a small position and hedge with options around the next earnings release, given how volatile LULU gets post-report.

Curious what others are thinking—dead cat bounce incoming or long-term buying opportunity?

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