Lululemon Stock Hits 5-Year Low Amid Tariff-Related Challenges: Is It a Bargain Buy?

Lululemon Athletica's stock has fallen 58% YTD, reaching new 52-week and multi-year lows. Sales growth has slowed, and the company expects a $240mln hit to its bottom line due to tariffs. Despite this, the stock trades at a forward P/E multiple of 12, making it a potential bargain buy. However, upcoming quarters may see further declines, and investors should weigh the risks before investing.

Lululemon Athletica (NASDAQ: LULU) has seen its stock price plummet in 2025, down by 58% year-to-date, hitting new 52-week and multi-year lows. The company's share price has fallen from its peak in December 2023, down nearly 69% Lululemon Stock Collapse Forces Investors to Rethink Valuation Floors^[1]. This significant decline has left investors questioning the future of the once-darling apparel maker.

The primary drivers behind Lululemon's stock decline include increased competition from brands like Vuori and Alo, and the impact of tariffs on the company's margins. US sales have stagnated, further exacerbating the situation. Management has responded by cutting its full-year sales outlook to $10.85 billion to $11 billion for the fiscal year ending January 2026 Lululemon Stock Collapse Forces Investors to Rethink Valuation Floors^[1]. Analysts expect revenue growth to be modest, with estimates calling for 3.5% growth in 2025, 4.8% in 2026, and 5.8% in 2027. However, earnings growth estimates are less optimistic, with analysts expecting a decline of roughly 11% in 2025, followed by 1% growth in 2026 and 8% in 2027 Lululemon Stock Collapse Forces Investors to Rethink Valuation Floors^[1].

Despite these challenges, Lululemon remains profitable and free-cash flow positive, with a tight balance sheet. However, the company's inventory levels have increased by more than 20% while revenue grew by less than 5%, raising concerns about potential markdowns and inventory management issues Rothschild Redburn cuts Lululemon stock price target to $160 on tariff concerns^[2]. Analysts have responded by lowering their price targets, with Rothschild Redburn cutting its target to $160, reflecting concerns about tariffs and the company's ability to reengage customers and drive premium growth Rothschild Redburn cuts Lululemon stock price target to $160 on tariff concerns^[2].

The stock currently trades at a forward P/E multiple of 12, making it a potential bargain buy for some investors. However, upcoming quarters may see further declines if the company struggles to turn around its business. Investors should weigh the risks before considering a position in LULU stock, as the company's operational issues and the impact of tariffs remain significant headwinds.