Lululemon Athletica (LULU) AI Stock Analysis

• Market Cap: $19.58B
• Dividend Yield: N/A
• Average Volume (3M): 2.18M
• Price to Earnings (P/E): 16.0
• Beta (1Y): 0.98
• Revenue Growth: 8.76%
• EPS Growth: 3.41%
• Country: US
• Employees: 39,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 5.01
• Shares Outstanding: 112,190,040
• 10 Day Avg. Volume: 2,562,635
• 30 Day Avg. Volume: 2,176,781
• PEG Ratio: 1.40
• Price to Book (P/B): 11.74
• Price to Sales (P/S): 4.79
• P/FCF Ratio: 32.06
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 1.61
• Enterprise Value/Gross Profit: 2.76
• Enterprise Value/Ebitda: 6.05
• 1Y Price Target: $202.87
• Price Target Upside: 26.87% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 18
• EPS Forecast (FY): 12.53
• Revenue Forecast (FY): $11.51B

• Rating: 73 Outperform
• Price Target: $190.00 ▲(18.82% Upside)
• Action: Reiterated Date: 01/14/26
• Date: Action: Reiterated 01/14/26

The score is driven primarily by strong underlying fundamentals (profitability, returns, and solid balance sheet), partially offset by slowing recent growth and weaker cash conversion. Technicals are improving but not fully bullish given the stock remains below the 200-day average. Valuation appears reasonable at a mid-teens P/E, while the latest earnings call signals a mixed near-term setup (international/digital strength vs U.S. softness and margin pressure).

Positive Factors

High margins & strong returns

Sustained high gross margins and very strong ROE reflect durable pricing power, brand premium and efficient capital allocation. These traits support long-term profitability even if top-line growth slows, enabling reinvestment in product and international expansion.

Robust digital / DTC mix

A large and growing direct-to-consumer digital channel (42% of sales) provides higher margin, customer data, and scale benefits. This omnichannel strength reduces reliance on wholesale, improves customer lifetime value, and supports efficient new product launches and marketing.

Strong international expansion

Rapid international growth, notably high-single-digit expansion in China, diversifies revenue and offers higher growth runway than saturated domestic markets. Continued store openings and regional momentum can offset Americas softness and sustain company-level growth.

Negative Factors

Revenue growth deceleration

A clear slowdown in trailing revenue growth reduces operating-leverage upside and signals maturation in core markets. Slower top-line expansion constrains margin expansion potential and raises the bar for product innovation and international execution to sustain long-term returns.

Margin pressure from tariffs/markdowns

Material gross-margin erosion from tariffs and elevated markdowns is a structural headwind if costs persist or inventory discipline slips. Sustained pressure forces trade-offs between price, promotion and margin, limiting reinvestment and squeezing long-term profitability if unresolved.

Weaker cash conversion

Declining cash conversion and lower free-cash-flow growth reduce financial flexibility for buybacks, capex, and inventory management. Persistent working-capital pressure or higher reinvestment needs can constrain capital returns and limit resilience in downturns.

Lululemon Athletica Business Overview & Revenue Model

Company Description

lululemon 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 Money

Lululemon generates revenue primarily through the sale of its athletic apparel and accessories. The company operates a direct-to-consumer model, which includes both brick-and-mortar stores and a robust e-commerce platform. Key revenue streams include sales from retail locations, online sales, and wholesale partnerships with select retailers. Additionally, Lululemon has introduced a range of experiential offerings, such as fitness classes and events, which help to strengthen customer loyalty and engagement. The company also invests in collaborations and partnerships with fitness influencers and studios, which can enhance brand visibility and drive sales.

Lululemon Athletica Financial Statement Overview

Summary

Strong profitability and returns (high gross margins and very strong ROE) with manageable leverage support a high-quality profile, but TTM growth deceleration, softer margins, and weaker cash conversion/free-cash-flow trend temper the score.

Income Statement

Lululemon shows strong profitability with consistently high gross margins (~55–59%) and solid net margins (~10–17%) across the period. Revenue growth has been robust historically (2022–2024), but the latest TTM (Trailing-Twelve-Months) shows a clear deceleration versus prior years, and margins have softened from the FY2025 level (net margin down from ~17% to ~16% in TTM), suggesting growth is normalizing and operating leverage is less supportive near-term.

Balance Sheet

The balance sheet looks healthy: leverage is moderate with debt-to-equity generally ~0.31–0.39 and equity steadily building. Returns on equity are very strong (roughly ~27% to ~42%, including ~40% in TTM (Trailing-Twelve-Months)), indicating efficient capital use. The main watch-out is modestly higher leverage in the latest TTM versus the prior annual period, though still well within a manageable range.

Cash Flow

Cash generation is positive with meaningful operating cash flow and free cash flow in both FY2025 and TTM (Trailing-Twelve-Months). However, cash conversion has weakened: operating cash flow relative to net income fell to ~1.01x in TTM (from ~1.24x in FY2025), and free cash flow relative to net income dropped to ~0.61x (from ~0.70x). Free cash flow growth is also negative in the latest periods, pointing to higher reinvestment and/or working-capital pressure tempering near-term cash efficiency.

Breakdown	TTM	Jan 2025	Jan 2024	Jan 2023	Jan 2022	Jan 2021
Income Statement
Total Revenue	11.07B	10.59B	9.62B	8.11B	6.26B	4.40B
Gross Profit	6.47B	6.27B	5.61B	4.49B	3.61B	2.46B
EBITDA	2.95B	2.95B	2.59B	2.02B	1.60B	1.04B
Net Income	1.74B	1.81B	1.55B	854.80M	975.32M	588.91M
Balance Sheet
Total Assets	7.96B	7.60B	7.09B	5.61B	4.94B	4.19B
Cash, Cash Equivalents and Short-Term Investments	1.04B	1.98B	2.24B	1.15B	1.26B	1.15B
Total Debt	1.76B	1.58B	1.40B	1.07B	881.05M	798.68M
Total Liabilities	3.45B	3.28B	2.86B	2.46B	2.20B	1.63B
Stockholders Equity	4.50B	4.32B	4.23B	3.15B	2.74B	2.56B
Cash Flow
Free Cash Flow	1.13B	1.58B	1.64B	327.81M	994.61M	574.11M
Operating Cash Flow	1.86B	2.27B	2.30B	966.46M	1.39B	803.34M
Investing Cash Flow	-712.02M	-798.17M	-654.13M	-569.94M	-427.89M	-695.53M
Financing Cash Flow	-1.26B	-1.65B	-548.83M	-467.49M	-844.99M	-80.79M

Lululemon Athletica Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 159.91
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 159.91 is below the 20-day moving average (MA) of 174.16, below the 50-day MA of 184.03, and below the 200-day MA of 197.13, indicating a bearish trend. The MACD of -6.29 indicates Positive momentum. The RSI at 33.58 is Neutral, neither overbought nor oversold. The STOCH value of 8.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LULU.

Lululemon Athletica Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ROST	76 Outperform	$67.26B	28.12	36.25%	0.90%	3.71%	0.65%
LULU	73 Outperform	$19.58B	15.98	39.78%	―	8.76%	3.41%
URBN	68 Neutral	$5.79B	13.74	17.66%	―	11.09%	51.51%
ONON	66 Neutral	$12.99B	62.44	13.48%	―	38.94%	81.82%
GAP	64 Neutral	$8.68B	12.79	22.98%	2.45%	0.29%	3.65%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
AEO	54 Neutral	$2.95B	20.90	12.12%	2.09%	-1.15%	-0.98%

Lululemon Athletica Corporate Events

Lululemon Raises Q4 Outlook on Strong Holiday Demand

On January 12, 2026, Lululemon Athletica updated its outlook for the fourth quarter of fiscal 2025, saying it now expects net revenue and diluted earnings per share to come in toward the high end of its prior guidance ranges of $3.500 billion to $3.585 billion in sales and $4.66 to $4.76 in EPS. The company left guidance for gross margin, operating expenses and effective tax rate unchanged, indicating that better-than-expected performance over the holiday period is driving the improved top- and bottom-line expectations while its cost structure remains in line, which suggests resilient demand and supports its ongoing efforts to strengthen its U.S. business as it meets with investors at the ICR Conference.

The most recent analyst rating on (LULU) stock is a Hold with a $215.00 price target. To see the full list of analyst forecasts on Lululemon Athletica stock, see the LULU Stock Forecast page.

Lululemon Faces Founder-Led Board Challenge, CEO Search

On December 29, 2025, Lululemon Athletica responded to a notice from founder Dennis “Chip” Wilson, who has disclosed plans to nominate three director candidates and submit a proposal to declassify the board at the company’s 2026 annual meeting, signaling a potential proxy battle. The board stated it had long engaged with Wilson and had sought his nominees’ names earlier to avoid a costly, distracting contest, and now plans to evaluate his candidates under its governance process while emphasizing that shareholders need not take any action yet. Lululemon highlighted its board refreshment, noting that over a third of directors joined in the last four years, and underscored its decade-long growth under current oversight, with revenues rising from $2.1 billion in fiscal 2015 to an expected $11.0 billion in fiscal 2025, a near sixfold increase in operating income, and more than $5.5 billion returned to shareholders via buybacks. The company also disclosed that it has launched a search for a new CEO to lead its next phase of growth and transformation, stressing its continued industry leadership since Wilson’s departure a decade ago and its commitment to acting in the best interests of all shareholders as it prepares recommendations ahead of the 2026 annual meeting.

The most recent analyst rating on (LULU) stock is a Hold with a $215.00 price target. To see the full list of analyst forecasts on Lululemon Athletica stock, see the LULU Stock Forecast page.

Lululemon Announces CEO Departure and Leadership Changes

On December 11, 2025, Lululemon Athletica announced that CEO Calvin McDonald will step down on January 31, 2026, with Marti Morfitt appointed as executive chair and Meghan Frank and Andre Maestrini as interim co-CEOs. The company also reported a 7% revenue increase to $2.6 billion for Q3 2025, with international growth offsetting declines in the Americas. Additionally, the board approved a $1.0 billion increase in its stock repurchase program, reflecting confidence in future growth.

The most recent analyst rating on (LULU) stock is a Hold with a $180.00 price target. To see the full list of analyst forecasts on Lululemon Athletica stock, see the LULU Stock Forecast page.