Lulu Stock Dips Despite Strong Earnings and CEO Transition — What Investors Need to Know

Lulu stock is in the spotlight this week as investors try to piece together what the latest developments mean for the brand’s future. On one hand, the company delivered strong third-quarter earnings, with revenue and earnings per share both topping expectations. On the other, its CEO is stepping down, and its market share in the direct-to-consumer segment is slipping. With the stock down over 50% in 2025, the question for investors is whether these events represent a buying opportunity or a warning sign. Let’s break down what’s happening and what it could mean for Lulu’s stock.

Q3 Earnings Beat, But Stock Dips After Hours

Lululemon Athletica (LULU) posted third-quarter 2025 results that beat expectations on both top and bottom lines. Revenue came in at $2.6 billion, according to the earnings call transcript. , according to CTV News. The company also raised its annual profit forecast and increased its stock buyback authorization by $1 billion as announced in the press release.

Despite the strong results, shares fell in after-hours trading, declining 2.46% to $183 according to the same earnings transcript. Analysts pointed to concerns about the company’s leadership transition and the broader challenges in the U.S. market, where demand has been soft and competition is heating up according to StockTwits analysis.

Leadership Shift and Market Share Pressures

The CEO transition is one of the key storylines to watch. Calvin McDonald, who has led the company for over seven years, . . Meghan Frank, the current Chief Financial Officer, and , the Chief Commercial Officer, will serve as co-interim CEOs during the transition period according to KSL reporting.

This change comes at a time when Lululemon is seeing pressure in its core markets. The company’s direct-to-consumer (DTC) market share in the U.S. fell from 30% to 24% in the past year. Meanwhile, competitors like Alo Yoga are gaining traction — Alo’s market share rose from 8% in September to 14% in November according to Yahoo Finance data. CEO Calvin McDonald acknowledged that product life cycles in core categories like lounge and social were too long, leading to stale offerings and reduced consumer interest according to Seeking Alpha.

What This Means for Investors

For investors, the mixed signals from Lululemon create a complex picture. On the positive side, the company is growing in international markets, particularly in China, where revenue jumped 46% year-over-year in the third quarter. The DTC digital channel also performed well, according to AI News. These are signs of strong execution and brand strength.

However, the challenges in the U.S. market and the stock’s underperformance this year are concerning. . Jefferies recently upgraded its rating for LULU from Underperform to Hold and raised its price target to $170, but it also called the stock "dead money" for 2026 due to uncertainty around earnings according to the analyst report.

The CEO transition could either stabilize the company or introduce more volatility, depending on how smoothly the new leadership team executes its strategy. In the short term, investors may be wary until they see more clarity on product innovation, inventory management, and how the company plans to regain market share.

Looking Ahead: Key Watchpoints for 2026

As 2026 begins, the key watchpoints for Lululemon will be how well the new leadership team can stabilize the business and drive growth. The company has outlined a $11 billion revenue target for 2026 according to QuiverQuant analysis, which suggests confidence in its international expansion and product offerings. But with , inventory management issues, and increased competition in the U.S. still on the table, it will be important for the new management to move quickly.

Investors should also keep an eye on the company’s full-year guidance and how it performs in the fourth quarter. While Q4 revenue guidance of $3.5 billion to $3.59 billion is in line with expectations according to Yahoo Finance, the EPS forecast for the quarter — $4.66 to $4.76 — is below the $4.97 analyst estimate. That gap could impact investor sentiment heading into the year-end.

At the end of the day, Lululemon remains a brand with strong fundamentals and a loyal customer base, but it’s facing growing challenges in a more competitive and uncertain market. The coming months will test its ability to adapt and innovate — and whether the stock will start to reflect that strength.