After a 9.6% weekly jump in late November 2025, lululemon athletica Inc. stock is sparking fierce debate: Is this a buying opportunity, or just a fleeting rally in a company still reeling from one of its worst years on record? The surge followed Janine Stichter, an analyst at BTIG, reaffirming a ‘Buy’ rating with a $303 price target — more than 70% above where shares were trading. That single note triggered a 4.98% pop the next day, but it’s only the latest twist in a year defined by contradictions. While the stock is down 57% year-to-date and 43.1% over the past 12 months, profits are still climbing. The market, it seems, is pricing in fear — not fundamentals.
U.S. Slump vs. International Surge
In its second quarter of fiscal 2025, lululemon athletica Inc. reported a 4% drop in comparable store sales across the Americas — its largest and most profitable market. Sales in casual and lounge wear, once the backbone of its growth, have flattened. Customers aren’t rejecting the brand, exactly. They’re just not excited anymore. The core products feel predictable. The magic of the ‘athleisure’ revolution has worn off for many North American shoppers.
But here’s the twist: while the U.S. stalls, the rest of the world is exploding. International revenue jumped 22% in Q2 (20% in constant currency), with Mainland China leading the charge. Sales there soared 25% (24% in constant currency), fueled by new stores in tier-one cities and high-energy brand activations. lululemon athletica Inc. isn’t just growing abroad — it’s outperforming its own projections. The company now has 165 stores in China and is on track to hit 200 by 2026, part of its ‘Power of Three X2’ strategy to quadruple international revenue from 2021 levels.
Strong Balance Sheet, Weak Sentiment
Despite the stock’s collapse, the financial engine is humming. lululemon athletica Inc. posted a 36.10% average Return on Equity over the last five years. Net sales are growing at 23.03% annually. Operating profit rose 27.46%. Free cash flow sits at $1.16 billion — and is projected to hit $1.6 billion by 2030. Its debt-to-equity ratio remains low. The company isn’t bleeding cash. It’s building it.
Yet the market is punishing it. The stock trades at a P/E of just 11.3 — the lowest in over a decade, echoing levels seen during the 2008 financial crisis. Its price-to-book ratio of 4.74 suggests investors aren’t valuing its brand power or international runway. Even Prudential Financial Inc., a major institutional investor, increased its stake on November 23, 2025, signaling confidence that the market has overcorrected.
India, Tariffs, and the Road Ahead
Next up: India. lululemon athletica Inc. plans to enter the market through a franchise partnership in the second half of fiscal 2026. That’s not just expansion — it’s a bet on the next billion-dollar consumer market. Meanwhile, the company is absorbing new costs from U.S. tariff changes. The removal of the $800 de minimis exemption for imported packages is squeezing margins on direct-to-consumer sales, a key channel for brand loyalty.
Analysts are split. Zacks gives lululemon athletica Inc. a #3 (Hold) rating, citing mixed signals: fiscal 2025 EPS guidance of $12.770–$12.970, but conflicting projections on earnings growth — some forecast a 11.8% drop this year, others see a 1.1% rebound in 2026. Still, institutional ownership remains at 100%, meaning every share is held by professionals — not retail speculation.
Why This Matters Beyond the Stock Chart
This isn’t just about one athletic wear brand. It’s a case study in how markets misprice resilience. lululemon athletica Inc. is navigating a classic growth paradox: domestic saturation, international breakout, and investor skepticism all at once. The company’s ability to turn China’s momentum into global scale could redefine its valuation. But if U.S. demand doesn’t rebound — and the casual wear category doesn’t reinvent itself — the stock may stay trapped in a value trap.
For now, the numbers tell a story the market is ignoring: profits rising, cash flowing, global demand surging. The stock’s recent 7.23% one-day jump on November 26, 2025, outpaced the S&P 500’s 0.91% gain. Over the past month, lululemon athletica Inc. rose 2.12% while the broader index fell 0.38%. That’s not noise. It’s a signal.
Frequently Asked Questions
Why is lululemon’s stock down so much if profits are still rising?
Investors are pricing in fears about slowing U.S. demand, especially in casual wear, and concerns that the brand’s appeal is fading in its largest market. Even though profits rose 13.4% and free cash flow hit $1.16 billion, the market is focused on the 4% drop in comparable store sales in the Americas and a 57% year-to-date stock decline. Valuation multiples like the P/E of 11.3 reflect this pessimism, despite strong international growth.
How significant is China’s growth for lululemon’s future?
Extremely. Mainland China generated 25% revenue growth in Q2 fiscal 2025, outpacing all other regions. With 165 stores already open and a target of 200 by 2026, China is now the company’s second-largest market. International revenue grew 22% overall, and lululemon athletica Inc. expects 20–25% growth in China for fiscal 2025. This market is critical to offsetting U.S. stagnation and achieving its goal to quadruple international revenue by 2026.
What’s the outlook for lululemon’s profitability in 2026?
Analysts are divided. Zacks consensus estimates show 11.9% EPS growth for fiscal 2025, but other sources predict an 11.8% earnings drop that year, followed by a modest 1.1% rebound in fiscal 2026. The company’s guidance of $12.770–$12.970 EPS for 2025 suggests stability, but margin pressure from U.S. tariff changes and higher digital marketing spend could limit upside. Long-term, free cash flow is projected to hit $1.6 billion by 2030, signaling strong underlying health.
Why did BTIG’s analyst note trigger such a big stock jump?
Janine Stichter’s $303 price target implied over 70% upside from the November 2025 price, making it one of the most aggressive calls in the sector. Her reaffirmation of a ‘Buy’ rating came at a time when sentiment was at its lowest, and institutional investors were quietly accumulating shares. The market had discounted nearly all optimism — so even a moderate upgrade felt like a catalyst. The 4.98% jump the next day was a classic ‘short squeeze’ of expectations.
Is lululemon a good investment right now?
It depends on your time horizon. Short-term traders may see volatility and avoid it. But for long-term investors, the combination of a 36% ROE, $1.16 billion in free cash flow, and explosive growth in China and upcoming India entry makes it compelling. Simply Wall St. scores its valuation at 5/6 — suggesting it’s undervalued. The risk is U.S. stagnation dragging down perception. The reward? A global powerhouse redefining its growth story.
What role does India play in lululemon’s strategy?
India represents lululemon’s next major growth frontier. The company plans to enter through a franchise model in H2 fiscal 2026, avoiding the capital intensity of direct ownership. With rising fitness culture and a growing middle class, India could mirror China’s trajectory. A successful launch would validate lululemon’s international playbook and open a market of over 1.4 billion people — a potential $5 billion opportunity if penetration reaches just 1%.