Lululemon Stock Is Down Roughly 50% Over the Past Year. Here’s the Turnaround Case

Key Stats for LULU Stock

• Past week’s performance: 3.9%
• 52-week range: $104 to $238
• Valuation model target price: $134
• Implied upside: 14.9% over 2.6 years

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lululemon’s Rough Year Sets Up a Turnaround Test

lululemon (LULU) has had a brutal stretch, with shares down sharply from their 52-week high even after a modest bounce this week. The company just settled a bitter proxy fight with founder Chip Wilson and named a new CEO, all while cutting its full-year outlook. That combination has left investors trying to figure out where the bottom is.

In early June, lululemon reported first-quarter revenue of $2.5 billion, up 4% year over year, but earnings per share fell to $1.69 from $2.60 a year earlier. Tariffs cut into gross margin by roughly 280 basis points, and the company slashed its full-year revenue guidance to $11.0 billion to $11.15 billion.

Interim co CEO Meghan Frank told analysts the quarter reflected “spikes of negative commentary in the media and on social channels,” which weighed on traffic and sales in North America. US revenue fell 4% for the quarter, even as China Mainland sales surged 30%, highlighting how uneven the brand’s performance has become across regions.

Wilson’s proxy battle ended in late May with a cooperation agreement, adding two new directors to the board. Incoming CEO Heidi O’Neill, a longtime Nike executive, takes over in September and inherits a brand under real pressure. If LULU stock stabilizes here, the setup could reward patient investors.

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Is LULU Stock Undervalued?

Under valuation model assumptions realized through 12/31/28, the stock is modeled using:

• Revenue growth (CAGR): 2.6%
• Operating margins: 15.5%
• Exit P/E multiple: 10.5x

Based on these inputs, the model estimates a target price of $134, implying 14.9% total upside and a 5.6% annualized return over the next 2.6 years.

lululemon now trades at roughly 10 times forward earnings, a steep discount to its own history and to athletic apparel peers. That multiple reflects genuine uncertainty about whether the brand can reverse its North American slide, especially with a leadership transition still underway.

An annualized return of 5.6% sits in a gray zone, above the weak sub 5% threshold but well short of the 15% level that signals a truly undervalued setup. That reflects modest assumed revenue growth of just 2.6%, a sharp comedown from the double-digit growth rates lululemon posted over the past decade.

China remains the one clear bright spot, growing 30% last quarter even as the US market struggled. If new CEO Heidi O’Neill can translate that international momentum into a North American recovery, the current valuation could prove too conservative.

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lululemon Versus Athletic Apparel Peers

lululemon trades at roughly 10 times forward earnings, a steep discount to Nike (NKE)’s 30 times, even though Nike’s own fiscal 2026 EPS is expected to decline 27.3% on revenue growth of just 1.1%. That gap is unusual since lululemon, despite its own guidance cut, still posted 4% revenue growth last quarter, faster than what Nike is currently delivering, yet the market is pricing lululemon as the more troubled name.

On Holding (ONON) sits on the opposite end of the spectrum entirely. It grew net sales 14.5% reported and 26.4% on a constant currency basis last quarter, and management raised its full-year growth outlook to at least 23% along with a gross margin target above 64.5%. That kind of acceleration commands a growth multiple well above both lululemon and Nike, since investors are rewarding On for taking share in premium running and lifestyle categories.

The wide range across these three names, from lululemon’s roughly 10 times earnings to On’s much richer multiple, mostly comes down to trust in near-term execution. Nike and lululemon are both mid-turnaround, while On is still in its growth phase, and that distinction is doing most of the work in how each stock gets valued right now.

See whether Lululemon can finally recover in 2025 after its 54% drop >>>

What’s Driving LULU Stock Going Forward?

Heidi O’Neill’s arrival in September is the clearest catalyst on the horizon. Her background at Nike gives her direct experience turning around a challenged athletic brand, and investors will be watching closely for early signs of a product and marketing reset once she takes the helm.

Tariff mitigation remains a near-term swing factor. Management expects to offset nearly all of the tariff impact by the second half of the year through pricing adjustments and supply chain efficiencies, which should help stabilize margins if executed well.

China’s growth trajectory is worth watching closely too. The region grew 30% last quarter, and management still expects roughly 20% growth annually going forward, giving lululemon a genuine international growth engine even as North America works through its slump. A stabilizing US trend alongside continued China strength would be the clearest signal the turnaround is taking hold.

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Should You Invest in lululemon athletica?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up LULU, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!