Lululemon Athletica (LULU) AI Stock Analysis

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Lululemon Athletica

(NASDAQ:LULU)

Rating:84Outperform

Price Target:

$363.00

▲(9.74%Upside)

Lululemon Athletica scores highly due to its robust financial performance, characterized by strong revenue and profit growth and efficient operations. Technical analysis indicates positive momentum, though mixed signals exist due to moving averages. Valuation is moderate, with a reasonable P/E ratio but no dividend yield. The recent earnings call provided a cautiously optimistic outlook, highlighting growth but also pointing out potential challenges such as margin pressures in 2025.

Positive Factors

International Growth

International momentum led by China is expected to drive upside to above-consensus estimates, highlighting significant growth opportunities.

Market Valuation

Shares of Lululemon trade at a discount to scaled active brands, potentially representing a value opportunity for investors.

Product Launch

The new Align No Line pant is gaining traction and could drive positive U.S. same-store sales growth in the coming quarters.

Negative Factors

Competition

Competition is gaining share, and Lululemon is cutting prices in Asia.

Inventory Management

Rising inventories are likely to result in higher markdowns and gross margin compression.

Traffic Trends

Foot and web traffic remain weak and below that of sector peers.

Lululemon Athletica (LULU) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$41.95B

Dividend YieldN/A

Average Volume (3M)1.69M

Price to Earnings (P/E)23.0

Beta (1Y)0.90

Revenue Growth10.07%

EPS Growth19.40%

CountryUS

Employees39,000

SectorConsumer Cyclical

Sector Strength73

IndustryApparel - Retail

Share Statistics

EPS (TTM)2.60

Shares Outstanding115,034,560

10 Day Avg. Volume2,010,498

30 Day Avg. Volume1,688,709

Financial Highlights & Ratios

PEG Ratio3.06

Price to Book (P/B)7.87

Price to Sales (P/S)0.00

P/FCF Ratio20.32

Enterprise Value/Market Cap0.76

Enterprise Value/Revenue0.78

Enterprise Value/Gross Profit5.07

Enterprise Value/Ebitda2.91

Forecast

1Y Price Target

$341.33

Price Target Upside3.19% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering27

Lululemon Athletica Business Overview & Revenue Model

Company Descriptionlululemon athletica inc., together with its subsidiaries, designs, distributes, and retails athletic apparel and accessories for women and men. It operates in two segments, Company-Operated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for healthy lifestyle and athletic activities, such as yoga, running, and training, as well as other sweaty pursuits. It also provides fitness-related accessories and footwear. The company sells its products through a chain of company-operated stores; outlets and warehouse sales; interactive workout platform; a network of wholesale accounts, such as yoga studios, health clubs, and fitness centers; temporary locations; and license and supply arrangements, as well as directly to consumer through mobile apps and lululemon.com e-commerce website. As of January 30, 2022, it operated 574 company-operated stores under the lululemon brand in the United States, Canada, the People's Republic of China, Australia, the United Kingdom, Japan, New Zealand, Germany, South Korea, Singapore, France, Malaysia, Sweden, Ireland, the Netherlands, Norway, and Switzerland. lululemon athletica inc. was founded in 1998 and is based in Vancouver, Canada.

How the Company Makes MoneyLululemon Athletica generates revenue primarily through the sale of its athletic apparel and accessories. The company's key revenue streams include retail sales from its brick-and-mortar stores, which are strategically located in high-traffic urban areas, and online sales through its e-commerce platform, which provides a convenient shopping experience to a global customer base. Additionally, Lululemon offers a membership program, which contributes to customer loyalty and repeat purchases. The company also engages in community-based marketing and events, such as yoga classes and fitness workshops, to strengthen its brand and drive sales. Strategic partnerships and collaborations with designers and influencers further enhance brand visibility and attract new customers.

Lululemon Athletica Key Performance Indicators (KPIs)

Any

Store Count

Store Count
Indicates the total number of retail locations, reflecting the company's physical presence and expansion strategy, which can drive revenue growth and brand visibility.

Chart InsightsLululemon's store count has consistently increased, reflecting a strategic focus on international expansion. The latest earnings call underscores this with plans to open 40 to 45 new stores, primarily abroad, despite challenges in the U.S. market. This expansion aligns with strong international revenue growth, particularly in China, which saw a 38% increase. However, investors should be mindful of margin pressures from FX and tariffs, which could impact profitability despite the growth in store footprint and revenue.

Data provided by:

Main Street Data

Lululemon Athletica Earnings Call Summary

Earnings Call Date:Jun 05, 2025

(Q4-2024)

% Change Since: 0.00%|

Next Earnings Date:Aug 28, 2025

Earnings Call Sentiment Neutral

Lululemon's earnings call highlighted strong revenue growth and successful product innovation. However, challenges in the U.S. market due to traffic declines and significant FX and tariff headwinds are expected to pressure margins in 2025.

Q4-2024 Updates

Positive Updates

Revenue Growth Exceeds Expectations

For Q4, total net revenue rose 13% or 14% in constant currency to $3.6 billion, and excluding the 53rd week, net revenue increased 8% or 9% in constant currency.

Strong International Performance

China Mainland revenue increased 38% or 39% in constant currency with comparable sales increasing 27%. In the Rest of World, revenue grew by 22% or 26% in constant currency.

Product Innovation and Launches

Successful launches of new product lines like Glow Up, Daydrift, BeCalm, and the expansion of the Align franchise indicate strong product innovation.

Share Repurchase Program

In Q4, Lululemon repurchased $332 million of stock, bringing total repurchases in 2024 to $1.6 billion, reflecting confidence in long-term prospects.

Negative Updates

Softening Traffic in the U.S.

The U.S. market experienced traffic declines attributed to a dynamic macro environment, which contributed to a cautious consumer.

FX and Tariff Headwinds Impact Margins

Foreign exchange and tariffs are expected to be a $0.30 to $0.35 drag on EPS in 2025, and gross margins are expected to decrease approximately 60 basis points.

Operating Margin Pressure

Operating margin for full year 2025 is expected to decrease by approximately 100 basis points due to FX headwinds, tariffs, and increased expenses.

Company Guidance

In the Lululemon Athletica Inc.'s fourth quarter and full-year 2024 financial results conference call, the company provided guidance for 2025, highlighting several key metrics. For the full year of 2025, Lululemon expects revenue to range between $11.15 billion and $11.3 billion, representing a growth of 7% to 8% when excluding the 53rd week. The company plans to open 40 to 45 net new stores, primarily in international markets, contributing to a 10% increase in square footage. Gross margins are anticipated to decrease by approximately 60 basis points due to factors such as foreign exchange headwinds and increased tariffs. SG&A expenses are expected to see a deleverage of 40 to 50 basis points as the company continues to invest in its Power of Three x2 roadmap. Operating margin is projected to decrease by 100 basis points compared to 2024. The effective tax rate is estimated at approximately 30%, and diluted earnings per share are expected to range from $14.95 to $15.15. Lululemon also plans capital expenditures of $740 million to $760 million to support business growth initiatives.

Lululemon Athletica Financial Statement Overview

Summary

Lululemon Athletica demonstrates strong revenue growth and profitability metrics across all financial statements. The income statement shows robust margins, the balance sheet reflects low leverage and high shareholder returns, and cash flow generation is strong, although there's a slight dip in free cash flow growth.

Income Statement

Very Positive

Lululemon Athletica demonstrates strong revenue growth with a TTM increase of 10.10% from the previous year. The company maintains robust profitability metrics, with a gross profit margin of 59.21% and a net profit margin of 17.14% for the TTM. EBIT and EBITDA margins are also impressive at 23.94% and 26.80% respectively, indicating efficient operations and effective cost management.

Balance Sheet

Very Positive

The company's balance sheet is solid, with a debt-to-equity ratio of 0.36, showcasing a strong equity position. The return on equity (ROE) stands at 41.57%, reflecting excellent profitability for shareholders. Additionally, an equity ratio of 57.42% indicates a healthy capital structure and low financial leverage.

Cash Flow

Very Positive

Lululemon's cash flow is strong, with a free cash flow to net income ratio of 0.87, indicating effective cash generation relative to profits. The operating cash flow to net income ratio is 1.25, highlighting strong cash conversion efficiency. However, the free cash flow has slightly decreased by 3.70% compared to the previous year, which may warrant monitoring.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
10.59B	9.62B	8.11B	6.26B	4.40B
	Gross Profit
6.27B	5.61B	4.49B	3.61B	2.46B
	EBIT
2.51B	2.13B	1.33B	1.33B	819.99M
	EBITDA
3.02B	2.59B	2.02B	1.60B	1.00B
	Net Income Common Stockholders
1.81B	1.55B	854.80M	975.32M	588.91M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.98B	2.24B	1.15B	1.26B	1.15B
	Total Assets
7.60B	7.09B	5.61B	4.94B	4.19B
	Total Debt
1.58B	1.40B	1.07B	881.05M	798.68M
	Net Debt
-408.55M	-840.69M	-84.53M	-378.82M	-351.84M
	Total Liabilities
3.28B	2.86B	2.46B	2.20B	1.63B
	Stockholders Equity
4.32B	4.23B	3.15B	2.74B	2.56B
Cash Flow		Free Cash Flow
1.58B	1.64B	327.81M	994.61M	574.11M
	Operating Cash Flow
2.27B	2.30B	966.46M	1.39B	803.34M
	Investing Cash Flow
-798.17M	-654.13M	-569.94M	-427.89M	-695.53M
	Financing Cash Flow
-1.65B	-548.83M	-467.49M	-844.99M	-80.79M

Lululemon Athletica Technical Analysis

Technical Analysis Sentiment

Positive

Last Price330.78

Price Trends

50DMA

289.72

Positive

100DMA

329.14

Positive

200DMA

320.07

Positive

Market Momentum

MACD

11.05

Negative

RSI

63.85

Neutral

STOCH

78.26

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LULU, the sentiment is Positive. The current price of 330.78 is above the 20-day moving average (MA) of 316.37, above the 50-day MA of 289.72, and above the 200-day MA of 320.07, indicating a bullish trend. The MACD of 11.05 indicates Negative momentum. The RSI at 63.85 is Neutral, neither overbought nor oversold. The STOCH value of 78.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LULU.

Lululemon Athletica Risk Analysis

Lululemon Athletica disclosed 39 risk factors in its most recent earnings report. Lululemon Athletica reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Lululemon Athletica Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LULU	84 Outperform	$41.95B	22.97	42.42%	―	10.07%	19.40%
URBN	81 Outperform	$6.50B	14.78	19.55%	―	8.38%	52.18%
ONON	77 Outperform	$18.95B	80.31	15.84%	―	34.75%	60.65%
GAP	72 Outperform	$8.19B	9.57	29.16%	2.80%	1.07%	28.03%
AEO	64 Neutral	$1.80B	10.64	12.19%	4.81%	-0.95%	-10.51%
Sector *	62 Neutral	$6.93B	11.25	2.95%	3.88%	2.69%	-24.71%
BIRD	55 Neutral	$64.30M	―	-72.29%	―	-23.63%	41.36%

* Consumer Cyclical Sector Average

Performance Comparison

LULU

Lululemon Athletica

330.78

7.75

2.40%

AEO

American Eagle

10.14

-10.73

-51.41%

GAP

Gap Inc

21.58

-3.43

-13.71%

URBN

Urban Outfitters

69.71

28.37

68.63%

ONON

On Holding AG

56.95

14.75

34.95%

BIRD

Allbirds

8.18

-2.68

-24.68%

Lululemon Athletica Corporate Events

Business Operations and StrategyFinancial Disclosures

Lululemon Projects Strong Q4 Fiscal 2024 Revenue Growth

Positive

Jan 13, 2025

Lululemon Athletica has revised its revenue and earnings expectations for the fourth quarter of fiscal 2024, projecting net revenue to reach between $3.560 billion to $3.580 billion, marking an 11% to 12% growth from the previous year. This adjustment, attributed to strong product reception during the holiday season, also anticipates an increase in gross margin and a slight improvement in expenses management, positioning the company favorably in the competitive athletic apparel market.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.