Lululemon - Pre earnings situation update

Welcome back! Let’s get right into today’s piece. This is more of a pre-earnings situation update on a highly topical name.

Disclosures: I, the sole owner of High Yield Harry LLC, do not own an equity position in this name at this time. The part-time writer of this piece on Lululemon has no position in this name at this time.

Lululemon ($LULU)

I would venture to guess that almost all readers know the brand Lululemon and the chances that most readers even own a piece of athletic wear from Lululemon is high. So let us here talk about some facts that the typical reader might not know about Lululemon, like that Lulu currently operates over 750 stores across 22 countries and that 40% of revenues are actually generated outside of the United States. And did you know that store sales outpace ecommerce sales, but only by about 12% as of 2024? I hope you enjoyed these fun facts, now let’s get into the important financial information.

Lulu stock has suffered a very tough twelve month return, posting a -22% total return over the last twelve months as of the end of August 2025. The growth momentum has certainly slowed, and of course there appears to be a further pullback in spending by consumers. These two factors, plus tariffs, have caused the market to adjust its view on future Lululemon earnings and perhaps have adjusted the multiple that market participants want to pay for an athleisure apparel company. The question now becomes should Lululemon investors be concerned over slowing growth, particularly in North America, and a higher discount rate, or view it as a company with a strong household brand, innovative pipeline, and expansion worldwide.

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