Lululemon and Tractor Supply Are Both Down Nearly 40%: Two Retail Losers, Is Either Stock a Buy?

Key Takeaways:

• Lululemon stock has fallen as much as 78% from its 2023 peak, hurt by slowing U.S. sales, tariff costs, and a China controversy that dented its fastest-growing market.
• Tractor Supply (stock is down a smaller but still steep amount after a rough second quarter, with weak fuel-driven demand and a struggling pet category weighing on comps.
• Both retailers are fighting rising tariff costs and softer shoppers, but Tractor Supply’s business model looks more durable while Lululemon’s growth story faces real questions.

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Two retailers, two stocks down close to 40%, two very different stories once you look at the numbers.

Lululemon (LULU) built its reputation on rapid growth and premium pricing. Tractor Supply (TSCO) built its reputation on steady, unglamorous consistency serving rural and small-town shoppers. Both have been beaten down.

But according to valuation data from TIKR.com, the market is pricing in very different paths forward for each one.

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Lululemon’s growth story is cracking

Lululemon’s stock decline is the steeper of the two, down roughly 78% from its all-time high set back in 2023.

The core issue is simple: growth has stalled just as costs are rising. Revenue climbed only 4% in the first quarter of fiscal 2026, and U.S. sales actually fell 4%. Interim Co-CEO and CFO Meghan Frank pointed to two specific culprits on the company’s earnings call.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top line performance,” Frank said. “And second, not all of our product launches have met our expectations.”

Tariffs are piling on top of that traffic problem. Lululemon now expects roughly $380 million in tariff costs this year, up from $275 million in 2025. That contributed to a 410-basis-point drop in gross margin during the quarter, according to the company’s earnings release.

Lululemon shares sit at $119.48, badly bruised from an all-time high near $500 set back in 2023. Wall Street’s mid-case target price is $147.41, according to TIKR.com valuation data, which works out to a 23.4% total return over 4.5 years, or just 4.8% annualized. That’s a modest recovery, not a screaming rebound.

The forecast breakdown explains why analysts aren’t more bullish. Revenue growth is expected to run at just 2.9% to 3.5% annually through 2032, a steep comedown from the 20.3% five-year and 18.3% ten-year historical growth rates the company put up during its boom years.

Net income margin is projected in the 10.6% to 12% range going forward, below the 14% five-year average and well below last year’s 17.1%.

The revenue and earnings chart tells the story in dollar terms. Lululemon’s fiscal 2026 revenue is expected to fall from $11.10 billion to about $11.04 billion in fiscal 2027, essentially flat, before climbing back to $13.94 billion by fiscal 2031.

Normalized EPS is projected to actually dip from $13.26 to $10.98 next year, before eventually recovering to $23.06 by 2031. That is a long runway before earnings meaningfully improve.

Perhaps more revealing is what already happened. Lululemon’s operating income actually fell from $2.51 billion in fiscal 2025 to $2.21 billion in fiscal 2026, even though revenue rose from $10.59 billion to $11.10 billion.

Gross margin also slipped to 56.6% from 59.22% the year before, the highest level in the company’s recent history. That’s a business generating more sales but keeping less of each dollar.

The stock’s valuation multiple reflects the concern. Lululemon’s forward price-to-earnings ratio now sits at 10.80x, far below its historical mean of 33.51x and nowhere near its 82.23x peak.

A cheap multiple can mean a bargain, or it can mean the market expects earnings to keep disappointing.

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Tractor Supply’s stumble looks more temporary

Tractor Supply’s drop has been less dramatic but still notable, triggered by a second quarter that fell short of expectations. Net sales rose about 2% to $4.5 billion, but comparable sales actually declined roughly 1.5%.

CEO Hal Lawton laid the blame largely on one unusually tough month. “Fuel prices peaked during the height of our spring selling season, putting meaningful pressure on our customers’ discretionary spending at the most important time of the quarter,”

Lawton said on the earnings call. Persistent drought in the Southeast made things worse, cutting into demand for lawn and outdoor products.

Big-ticket items, things like riding mowers and outdoor equipment, fell in the mid-single digits. The pet category remained a weak spot too, though CFO Kurt Barton noted it improved sequentially from the first quarter.

Tariffs and freight costs are squeezing Tractor Supply just like they’re squeezing Lululemon. Adjusted SG&A grew 7.3% and deleveraged about 118 basis points as a percentage of sales.

Because of the softer outlook, Tractor Supply withdrew its long-term financial framework entirely, promising an updated version alongside fourth-quarter results.

Still, management sounded confident the core business remains healthy. “Our core customer remain engaged with healthy retention,” Lawton said, adding that April and June both posted positive comparable sales, with May alone dragging down the whole quarter.

Shares trade at $30.21 with a mid-case target of $50.54, according to TIKR.com, implying a 67.3% total return over 4.4 years, or 12.3% annualized. That’s roughly two and a half times the annualized return projected for Lululemon.

The forecast assumptions are more modest but more consistent. Revenue growth is projected at 4.5% to 5.5% annually, close to its 10-year historical rate of 9.6% and its five-year rate of 7.9%. Net income margin is expected to hold steady between 6.6% and 7.3%, right in line with its 7.6% five-year average.

The revenue and EPS chart shows a business expected to grow every single year without interruption. Revenue climbs from $15.52 billion in fiscal 2025 to a projected $19.65 billion by fiscal 2030. Normalized EPS is expected to dip slightly to $1.93 in fiscal 2026 before rising steadily each year after, reaching $2.80 by 2030.

Tractor Supply’s margin trends also look healthier over time. Gross margin expanded from 35.17% in fiscal 2021 to 36.42% in fiscal 2025, and operating income has held fairly stable in the $1.3 billion to $1.5 billion range even through a tougher retail environment.

Its valuation multiple has also compressed, trading at 15.34x forward earnings versus a historical mean of 21.56x and a high of 28.34x. That’s a smaller discount than Lululemon’s, but it comes attached to a business with far less uncertainty baked into the forecast.

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Watch inventory health closely for both

For any retailer facing a slowdown, inventory levels are one of the clearest early warning signs. Piles of unsold goods often mean markdowns are coming, which squeezes margins further down the road.

Tractor Supply’s average inventory per store grew about 6.5%, which management attributed mostly to inflation and tariff costs rather than a genuine glut. Lululemon, meanwhile, actually cut inventory units by about 4% even as dollar value ticked up slightly, a sign it’s being more disciplined about not over-ordering product nobody wants.

So which stock drop is the better bet?

Lululemon still has a powerful brand and real fixes underway, faster product cycles, more marketing, and a chase strategy to restock popular styles quickly. But its growth deceleration looks structural rather than a one-quarter blip, and the guidance cut was severe.

Tractor Supply’s problem looks more tied to weather and fuel prices than to any fundamental crack in its business. Its customer base is loyal, and management is already taking action, closing underperforming Petsense stores and redirecting capital toward its best-returning initiatives.

Put the two side by side, and the contrast is stark. Lululemon’s mid-case scenario implies annualized returns of just 4.8%, with a wide range between 0.1% in the low case and 8.9% in the high case.

Tractor Supply’s mid-case implies 12.3% annualized, ranging from 7.5% on the low end up to 16.6% on the high end. Even Tractor Supply’s worst-case scenario roughly matches Lululemon’s best case.

That gap comes down to predictability. Tractor Supply’s forecasts assume modest, believable growth in a business that has grown revenue every year for a decade.

Lululemon’s forecasts assume a multi-year earnings recovery from a brand that only recently discovered its growth engine could stall.

Investors should still dig into each company’s Financials tab to track quarterly comp sales and margin trends as they develop, and revisit the Model tab periodically since both companies’ forecasts will shift as new guidance comes in.

But based on the current valuation data, Tractor Supply’s discount looks like the more straightforward opportunity, while Lululemon’s cheap multiple comes with considerably more risk attached.

Investors weighing these two names should dig into the Financials tab to compare sales trends, store performance and margins side by side, then check the Valuation tab to see which stock trades cheaper relative to its own history.

The Estimates and Model tabs can help gauge how soon Wall Street expects each business to turn the corner.

Neither stock is a screaming buy without some faith in a recovery. But of the two, Tractor Supply’s troubles look more like a rough patch, while Lululemon’s look more like a genuine reset in expectations.

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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!