Lululemon Athletica is an athletic apparel retailer known for its high-quality yoga-inspired activewear. It started as a design studio by day and a yoga studio by night. The company initially focused on creating high-performance yoga wear, particularly for women.
As Lululemon has grown, the athleisure market has become increasingly crowded. Competitors such as Nike, Adidas and Under Armour started offering similar products at competitive prices, putting significant pressure on Lululemon. However, this pressure has also spurred the brand to differentiate and innovate, ensuring its continued success.
Athleta aims to compete at a lower price point, while Vuori has become popular on the higher end. Competitive pressures have contributed to slowing growth. The consensus is that the company will report year-over-year quarterly revenue growth below 10% for the first time since supply chain disruptions affected their business during the Covid-19 pandemic.
Nevertheless, full-year revenue growth forecasts for fiscal 2026 (their fiscal year ends in January, so effectively, we're looking at the calendar year 2025) are still about 11%, with net income expected to grow just over 9%. Given that Lululemon is now trading about 19 times earnings, a discount to the S & P 500 and the lowest multiple since the 2008-09 bear market, one wonders if the sentiment has become pessimistic enough to make a bullish bet. Traders often refer to going long stocks in a recent and fairly prolonged downtrend as.