Lululemon Athletica (LULU) AI Stock Analysis

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Lululemon Athletica

(NASDAQ:LULU)

Rating:64Neutral

Price Target:

$270.00

▲(16.62%Upside)

Lululemon Athletica's overall stock score is primarily driven by its strong financial performance, showcasing robust revenue growth and solid profitability. However, this is counterbalanced by bearish technical indicators and valuation concerns. The earnings call presented mixed outcomes, with international expansion and product innovation as positives, yet facing challenges from tariffs and rising expenses.

Positive Factors

Financial Performance

If Lululemon's capital expenditures align with sector averages, future free cash flow could significantly exceed current expectations, making the shares appear undervalued.

Management Confidence

Management is confident in the scale of innovation in women's products for the fall and holiday seasons, markdowns, inventory composition, and their ability to mitigate current tariffs on EBIT margin.

Product Innovation

The introduction of new products like Align No Line and Daydrift has shown promising performance and expanded the product assortment online.

Negative Factors

Home Market Performance

Americas comp acceleration did not materialize as expected, confirming concerns about home market growth.

Market Growth Challenges

There are concerns about negative US traffic, slowing growth in China, rising Vietnam tariffs, increased competition in the Americas, and the financial impact of expanding store space.

Tariff and Pricing Uncertainty

The expectation is that Vietnam tariffs will rise, which could lead the sector to lower EPS guidance and create continued uncertainty around tariffs and pricing.

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

Market Cap

$28.93B

Dividend YieldN/A

Average Volume (3M)3.34M

Price to Earnings (P/E)15.8

Beta (1Y)0.84

Revenue Growth9.39%

EPS Growth17.28%

CountryUS

Employees39,000

SectorConsumer Cyclical

Sector Strength56

IndustryApparel - Retail

Share Statistics

EPS (TTM)2.60

Shares Outstanding114,729,430

10 Day Avg. Volume4,217,724

30 Day Avg. Volume3,342,868

Financial Highlights & Ratios

PEG Ratio37.24

Price to Book (P/B)6.40

Price to Sales (P/S)0.00

P/FCF Ratio19.84

Enterprise Value/Market Cap0.92

Enterprise Value/Revenue0.64

Enterprise Value/Gross Profit4.15

Enterprise Value/Ebitda2.38

Forecast

1Y Price Target

$310.44

Price Target Upside34.09% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering29

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 expansion continues robustly, with a notable acceleration in openings, particularly in international markets like China, aligning with their strategic focus. The earnings call highlights plans to open 40-45 new stores in 2025, emphasizing international growth. Despite challenges in the U.S. market, the company is leveraging product innovation and brand activations to bolster its global presence. This expansion strategy, coupled with strong revenue growth in China, positions Lululemon to mitigate domestic market pressures and capitalize on international opportunities.

Data provided by:

Main Street Data

Lululemon Athletica Earnings Call Summary

Earnings Call Date:Jun 05, 2025

(Q1-2025)

% Change Since: -30.01%|

Next Earnings Date:Aug 28, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed sentiment. While there were positive developments such as strong revenue growth in China, improved gross margins, and successful brand activations, there were significant challenges, particularly in the U.S. market and due to tariff impacts on margins. Inventory levels and SG&A expenses also raised concerns, contributing to a cautious outlook for Q2.

Q1-2025 Updates

Positive Updates

Revenue Growth Matches Guidance

Total revenue increased 7% or 8% on a constant currency basis, reaching $2.4 billion for Q1, meeting the high end of the guidance range.

Gross Margin Improvement

Gross margin increased by 60 basis points to 58.3%, driven by lower product costs, improved markdowns, and better fixed cost leverage.

Strong Performance in China

China Mainland revenue increased 22% in constant currency, despite a calendar shift due to Chinese New Year impacting Q1 growth by about four percentage points.

Successful Brand Activations

The 'Summer of Align' campaign successfully increased brand awareness, with unaided brand awareness in the U.S. growing from the mid-30s to 40%.

Continued Share Repurchases

Lululemon repurchased $430 million of stock, demonstrating strong balance sheet management and confidence in long-term prospects.

Negative Updates

U.S. Revenue Growth Challenges

Revenue growth in the U.S. was only 2%, reflecting cautious consumer behavior and intentional buying decisions.

Tariff-Related Margin Pressure

Anticipated gross margin decrease of 110 basis points for the full year, mainly due to increased tariffs, with mitigation strategies in progress.

Higher Inventory Levels

Inventory levels increased by 23% in dollar terms and 16% in units, driven by higher average unit costs related to tariffs and foreign exchange.

SG&A Deleveraging

SG&A expenses rose to 39.8% of net revenue, up from 38.1% last year, leading to an operating margin decrease to 18.5% from 19%.

Q2 Margin Pressure

Guidance indicates a Q2 operating margin decrease of approximately 380 basis points due to increased occupancy costs, depreciation, higher tariffs, and foreign exchange impacts.

Company Guidance

During Lululemon's first quarter 2025 earnings call, the company provided guidance on several key financial metrics. Total revenue increased by 7% year-over-year, or 8% on a constant currency basis, reaching $2.4 billion. The company maintained its full-year revenue guidance, expecting a growth rate of 7% to 8%. Earnings per share for the quarter were $2.60, surpassing expectations. Lululemon continued to repurchase shares, spending $430 million on buybacks in Q1, reflecting confidence in its long-term prospects. Gross margin improved to 58.3%, up 60 basis points from the previous year. Looking at geographical performance, revenue in the United States grew by 2%, Canada saw a 9% increase, China Mainland reported a 22% rise in constant currency, and the rest of the world experienced a 17% growth. The company plans to open 40 to 45 new stores in 2025, focusing on international markets, particularly in China. Lululemon highlighted its product innovation and brand activations as key drivers of success, noting strong responses to new product launches such as Align No Line, Daydrift, and Be Calm. Despite the challenges posed by increased tariffs and a cautious consumer environment, Lululemon remains optimistic about its ability to navigate these headwinds through pricing adjustments and supply chain efficiencies.

Lululemon Athletica Financial Statement Overview

Summary

Lululemon Athletica shows impressive financial performance with strong revenue growth, high profitability, and a solid balance sheet. Revenue has grown from $4.40 billion in 2021 to $10.75 billion TTM in 2025, with gross margins consistently above 50%. The company maintains healthy profit margins and cash flow generation, supporting growth and shareholder returns.

Income Statement

Very Positive

Lululemon Athletica demonstrates strong financial performance with robust revenue growth over the years, particularly from $4.40 billion in 2021 to $10.75 billion TTM (Trailing-Twelve-Months) in 2025. The company maintains high gross profit margins consistently above 50%, reaching approximately 59.4% in TTM. Net profit margins have also been solid, around 16.8% TTM, indicating strong profitability. EBIT and EBITDA margins are healthy, reflecting efficient operations.

Balance Sheet

Very Positive

The balance sheet reflects a strong equity base with a debt-to-equity ratio of approximately 0.40 TTM, showcasing prudent leverage management. The equity ratio is around 63.9% TTM, indicating a stable financial structure. Return on equity is impressive at 42.1% TTM, reflecting effective utilization of shareholders' funds. The company has been able to manage its liabilities while growing its equity.

Cash Flow

Very Positive

Lululemon Athletica exhibits robust cash flow generation with consistent growth in free cash flow, demonstrating financial health and operational efficiency. The operating cash flow to net income ratio is strong, indicating effective conversion of net income to cash. The free cash flow to net income ratio also supports the company's ability to generate cash from operations. Free cash flow growth has been positive, reinforcing the company's capacity for reinvestment and returning value to shareholders.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	10.75B	10.59B	9.62B	8.11B	6.26B	4.40B
Gross Profit	6.38B	6.27B	5.61B	4.49B	3.61B	2.46B
EBITDA	2.88B	3.02B	2.59B	2.02B	1.60B	1.00B
Net Income	1.81B	1.81B	1.55B	854.80M	975.32M	588.91M
Balance Sheet
Total Assets	6.71B	7.60B	7.09B	5.61B	4.94B	4.19B
Cash, Cash Equivalents and Short-Term Investments	1.33B	1.98B	2.24B	1.15B	1.26B	1.15B
Total Debt	1.71B	1.58B	1.40B	1.07B	881.05M	798.68M
Total Liabilities	3.14B	3.28B	2.86B	2.46B	2.20B	1.63B
Stockholders Equity	4.29B	4.32B	4.23B	3.15B	2.74B	2.56B
Cash Flow
Free Cash Flow	1.32B	1.58B	1.64B	327.81M	994.61M	574.11M
Operating Cash Flow	2.03B	2.27B	2.30B	966.46M	1.39B	803.34M
Investing Cash Flow	-773.48M	-798.17M	-654.13M	-569.94M	-427.89M	-695.53M
Financing Cash Flow	-1.79B	-1.65B	-548.83M	-467.49M	-844.99M	-80.79M

Lululemon Athletica Technical Analysis

Technical Analysis Sentiment

Negative

Last Price231.52

Price Trends

50DMA

279.77

Negative

100DMA

309.61

Negative

200DMA

318.76

Negative

Market Momentum

MACD

-19.84

Positive

RSI

29.71

Positive

STOCH

26.96

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LULU, the sentiment is Negative. The current price of 231.52 is below the 20-day moving average (MA) of 270.86, below the 50-day MA of 279.77, and below the 200-day MA of 318.76, indicating a bearish trend. The MACD of -19.84 indicates Positive momentum. The RSI at 29.71 is Positive, neither overbought nor oversold. The STOCH value of 26.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
URBN	79 Outperform	$6.18B	14.44	19.55%	―	8.38%	52.18%
GAP	72 Outperform	$8.01B	9.40	29.16%	3.06%	1.07%	28.03%
ONON	71 Outperform	$16.67B	71.24	15.84%	―	34.75%	60.65%
LULU	64 Neutral	$28.93B	15.80	42.49%	―	9.39%	17.28%
AEO	62 Neutral	$1.68B	10.01	12.19%	5.11%	-0.95%	-10.51%
Sector *	62 Neutral	$16.34B	11.01	-5.97%	3.14%	1.65%	-24.92%
BIRD	55 Neutral	$74.29M	―	-72.29%	―	-23.63%	41.36%

* Consumer Cyclical Sector Average

Performance Comparison

LULU

Lululemon Athletica

231.52

-76.78

-24.90%

AEO

American Eagle

9.69

-9.79

-50.26%

GAP

Gap Inc

21.46

-1.87

-8.02%

URBN

Urban Outfitters

68.93

26.27

61.58%

ONON

On Holding AG

51.48

12.45

31.90%

BIRD

Allbirds

9.22

-3.17

-25.59%

Lululemon Athletica Corporate Events

Executive/Board ChangesShareholder Meetings

Lululemon Elects Directors and Ratifies Auditor

Neutral

Jun 17, 2025

At Lululemon Athletica‘s 2025 Annual Meeting of Shareholders on June 11, 2025, several key decisions were made. Three Class III directors were elected, PricewaterhouseCoopers LLP was ratified as the independent public accounting firm for the fiscal year ending February 1, 2026, and executive compensation was approved. However, a shareholder proposal regarding a report on discrimination risks related to charitable partnerships was not approved.

The most recent analyst rating on (LULU) stock is a Buy with a $420.00 price target. To see the full list of analyst forecasts on Lululemon Athletica stock, see the LULU Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 12, 2025