Lululemon Athletica’s (LULU) performance over the past twelve months speaks volumes about its current position. Not long ago, the brand was a Wall Street favorite—celebrated for rapid growth, strong pricing power, constant innovation, and intense customer loyalty. Today, it’s confronting a stark reality: decelerating revenue, a declining “cool factor,” and governance issues marked by weak accountability and public pushback from its own founder.
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A drop of more than 50% in market value this year reflects a collapse in confidence that runs far deeper than the company’s actual operational slowdown. The market has simply stopped believing in the current leadership. And because Lululemon is clearly dealing with a crisis of confidence—one that transcends fundamentals and quarterly execution—I see anything short of drastic changes in leadership alignment and strategic direction as insufficient for a re-rating.
Until that happens, I expect LULU to keep underperforming, and in my view, the stock still deserves a Sell rating.
Surface Cracks in the Lululemon Growth Story
On the surface, competition has arguably been the main driver behind the breakdown of Lululemon’s growth story. When a pair of Lululemon yoga pants costs around $120, and a hoodie or jacket costs around $130, consumers naturally split into two directions.
The first is the down-market route—mainly Costco (COST). The warehouse giant sells athleisure apparel under brands like Kirkland, Danskin, and Jockey that look very similar to Lululemon’s pieces. They don’t match the same quality, but they get close enough—about 80% of the quality at 20% of the price. It’s no surprise Lululemon filed a lawsuit in the U.S., accusing Costco of selling knockoffs of its most iconic items—Define jackets, Scuba hoodies, and the famous ABC pants. Also, not just Costco, but Amazon (AMZN), Target (TGT), and Shein have all stepped up their game in terms of quality, pushing even more consumers down-market.
The second route is the complete opposite: up-market. A more premium crowd has been trading Lululemon for emerging aspirational brands like Alo Yoga, Vuori, and On Running (ONON). Alo has basically become a Gen-Z and millennial symbol, powered by TikTok and influencers. Vuori has been outgrowing Lulu in the men’s segment. And On Running has nailed the “premium lifestyle + performance” formula in both apparel and footwear. The message here is that the premium athleisure audience is no longer locked into Lululemon as the default choice—and this shift has been happening for a few years now.
Practically, this has taken Lululemon from compounding 20%–30% revenue growth to mid-single-digit or low-double-digit growth. Consensus now sees 2026 and 2027 as near-stagnation years, with only 2028 to 2030 showing a possible return to mid- to high-single-digit growth.
Under the Hood, Governance Is the Real Drag
Now, beneath the surface, the root cause of many of Lululemon’s issues seems to be governance. Recently, founder and former CEO Chip Wilson—who still owns about ~7% of the company, though he has been trimming that stake—publicly criticized the board of directors.
According to Mr. Wilson, the problem is that the board has become overly financial and lost its “creative function.” The implication is straightforward: when a highly innovative retail company goes public, the founder steps back, and the board fills up with more “metric-driven” profiles, the focus shifts from product to quarterly results. And that’s toxic in premium athleisure, a category that lives and dies by “cool factor,” design freshness, and aesthetic differentiation—areas where Lululemon’s edge has visibly faded.
Chip also points to the board’s lack of true “skin in the game,” with limited insider ownership. While the exact stake of each board member isn’t publicly disclosed, roughly 85% of Lululemon’s shares are held by institutional investors. That concentration matters, especially when insider trading data shows almost no conviction to “buy the dip.” Over the last 12 months, insiders bought only ~24k shares while selling ~86k—a net negative of ~62k shares.
In other words, at a time when the stock is down more than 50% year-to-date, neither management nor insiders are stepping in as buyers. That imbalance doesn’t prove the fundamentals are broken—but it does highlight a lack of visible confidence from the people closest to the business.
Valuation Looks Cheap, But Governance Clouds the Picture
The counterpoint to the bearish thesis on Lululemon is that, even though the company’s P/E multiple has dropped roughly 55% over the past twelve months, the underlying operational performance doesn’t necessarily point to structural distress. Yes, revenue growth has slowed from low double-digits to high single-digits, and the operating margin slipped from ~24% to ~23%—a meaningful decline but far from catastrophic.
At around 12.5x earnings, LULU can actually look too discounted from a purely operational lens. Management has also been leaning harder into innovation, betting on a product-line refresh and even announcing, in late October, a new line of NFL-branded apparel as part of a broader turnaround effort.
Still, internal governance frictions help explain—and arguably justify—a good portion of today’s bearish sentiment. Innovation clearly stalled, and unless there are major changes at the leadership level, it’s hard to see the market shifting its stance or granting LULU a strong re-rating anytime soon.
Is LULU a Buy, Hold, or Sell?
The vast majority of Wall Street analysts are basically sitting on the fence when it comes to LULU. Out of 25 ratings in the past three months, 22 are Holds, with only two Buys and one Sell. The average price target is $193.95, implying ~6.5% upside from the current share price.
Why Lululemon Still Looks Like Dead Money
Looking strictly at Lululemon’s fundamentals versus its collapsing valuation multiples, you could argue there’s an attractive asymmetry for anyone trying to “buy the weakness.” But the deeper issue is that the market simply doesn’t trust the current management team. That lack of confidence undermines any chance of capitalizing on the valuation gap and suggests LULU may really be drifting back toward pre-COVID-19 levels.
Unless there’s a clear signal of change at the top—whether a management overhaul, meaningful insider buying that shows real commitment, or a governance shift that puts actual ownership behind the decision-makers—it’s hard to see what triggers a meaningful re-rating. With growth still slowing and sentiment unlikely to turn on its own, I expect LULU to keep underperforming. For now, the stock still looks like a Sell.