lululemon Stock Hits 52-Week Low: Opportunity to Buy or Stay Cautious?

Shares of lululemon athletica inc. LULU hit a new 52-week low of $143.96 on March 27, 2026, before rising a notch to close at $145.85. The closing price reflects a 58.1% discount from its 52-week high of $340.25.

Additionally, this athletic apparel company’s stock has slipped below critical technical thresholds, such as its 50-day and 200-day moving averages, which are important indicators for gauging market trends and momentum. These raise investor concerns regarding LULU’s ability to navigate current market dynamics. The company’s downtrend came almost a couple of weeks after it reported fourth-quarter fiscal 2025 results, with revenues and earnings per share (EPS) surpassing the Zacks Consensus Estimate. The company delivered year-over-year top-line growth, supported by strength in its international business. LULU’s quarterly revenues rose 1% year over year and were flat on a constant-dollar basis.

Despite the strong performance, LULU shares have declined 8.4% since it reported fourth-quarter results on March 17. Investors have expressed caution about the company’s prospects and the year-over-year decline in bottom line, reflecting margin pressure from higher markdowns, tariff-related costs and elevated selling, general and administrative expenses. LULU stock has remained soft for a while now, declining 59.3% over the past few years. In the one-year time frame also, its shares have plunged 47.6% compared with the broader industry’s decline of 17.2% and the Zacks Consumer Discretionary sector’s drop of 4.9%. Meanwhile, the S&P 500 index registered growth of 16.9% in the past year.

LULU Stock's One-Year Price Performance

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What’s Behind LULU Stock’s Decline?

The decrease in LULU’s stock is not because of general market weakness but also reflects company-specific challenges. The most significant issue is the slowdown in its core North American business, which has historically been the company’s primary growth driver. In fourth-quarter fiscal 2025, net revenues declined 4% in the Americas and decreased 5% on a constant-dollar basis. In the preceding quarter, net revenues in the Americas dipped 2% both on a reported and constant-dollar basis. For fiscal 2026, the company expects North America revenues to be down 1-3%, reflecting a 1-3% decline in the United States.

Profitability has also come under pressure. The company has been witnessing pressure on margins due to rising input costs, increased markdowns and broader macroeconomic challenges, all of which are weighing on profitability. In the reported quarter, although EPS of $5.01 surpassed the consensus mark, it has declined 18.4% from $6.14 in the prior-year quarter. The gross profit declined 8% year over year while the gross margin contracted 550 basis points (bps), primarily affected by a 560-bps decline in the product margin, led by increased markdowns and tariff impacts. Tariffs had a gross negative impact of 520 bps in the quarter, partly offset by 110 bps from enterprise efficiency initiatives. Notably, markdowns increased 130 bps and fixed-cost deleverage weighed by 30 bps.

Although sales increased year over year in the fiscal fourth quarter, the Vancouver, Canada-based company is seeing slowed sales performance. Revenues rose 1% year over year in the reported quarter, softer than the 7.1% year-over-year growth seen in the preceding quarter. In the year-ago quarter, net revenues increased 13% or 14% on a constant dollar basis. The company is projecting only low single-digit revenue growth in 2026, marking a notable slowdown from its historically strong growth trajectory.

Consequently, management remains measured in its outlook, noting that a broader and more sustained improvement in regional performance is likely to develop gradually over the course of the year and extend into fiscal 2027, as the business works toward re-establishing a healthier baseline of full-price selling. In addition, tariffs continue to represent a meaningful cost headwind. Tariff pressures are expected to intensify, with gross costs likely to reach $380 million in fiscal 2026. To counter this, the company plans to leverage its enterprise-wide efficiency initiatives, which are anticipated to generate $160 million in offsets within the gross margin, helping cushion the overall impact.

lululemon’s Estimate Revision Trend

LULU’s EPS estimates for the first quarter and fiscal 2026 reflect downward revisions in the past 30 days. The Zacks Consensus Estimate for its first-quarter and fiscal 2026 EPS declined 24.2% and 3.1%, respectively, in the aforementioned time. The downward revision in earnings estimates indicates that analysts have been losing faith in the company’s growth potential.

The Zacks Consensus Estimate for LULU’s first-quarter fiscal 2026 sales suggests year-over-year growth of 2.7%, while the consensus mark for EPS indicates a decline of 32.7%. For fiscal 2026, the Zacks Consensus Estimate for LULU’s sales implies 3.5% year-over-year growth, while that of EPS shows a decline of 6.6%. The consensus mark for fiscal 2027 sales and EPS indicates 5.9% and 8.7% year-over-year growth, respectively.

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Evaluating LULU's Strengths & Long-Term Prospects

Despite the aforesaid limitations, lululemon’s comprehensive set of strategies reflects a structured effort to stabilize the business and drive long-term growth. The company is focused on improving product, strengthening customer engagement and enhancing operational efficiency. lululemon continues to benefit from the progress on its Power of Three X2 growth strategy.

A key priority for the company is refining its product creation strategy. lululemon is focusing on increasing innovation and introducing more newness into its assortment to keep the brand fresh and relevant. It is also working on enhancing product quality and streamlining its offerings by lowering the number of SKUs and creating more cohesive collections. It is also accelerating its product development cycle, with the goal of responding to evolving consumer preferences. LULU is increasing investments in brand activations and global marketing campaigns to strengthen its connection with consumers.

The company is also dedicated to reviving its North American business. The company noted that North America is already witnessing an improvement in full-price selling compared with the fiscal fourth quarter, signaling early progress in its efforts to enhance pricing quality. Driven by this positive momentum, management anticipates a return to year-over-year growth in full-price sales starting in the fiscal second quarter and continuing through the back half of the year. The recovery is likely to be driven by a steady pipeline of product introductions, ongoing innovation and timely updates to core offerings, all of which are designed to strengthen consumer appeal and support a healthier sustainable sales mix. The company continues to prioritize international expansion as a major growth driver. It is investing in new store openings, particularly in high-growth markets such as China. The use of localized strategies is expected to help the brand resonate more effectively with diverse consumer bases.

The company is also enhancing its retail and omnichannel capabilities by refining store layouts, creating a more premium in-store experience and strengthening its digital platforms to ensure a seamless journey across channels. Physical stores remain a powerful growth and brand-building engine for lululemon. In the fiscal fourth quarter, digital revenues improved 5% year over year and 9% in constant dollars, contributing $1.9 billion to the total revenues. Overall, these strategies indicate that lululemon is undergoing a strategic reset. The focus is on rebuilding product strength, improving execution and leveraging international opportunities, alongside maneuvering near-term challenges.

Undervalued Stock: Is It an Opportune Time to Buy?

From a valuation perspective, LULU shares present an attractive opportunity, trading at a discount to historical and industry benchmarks. The recent pullback has brought the stock valuation to a level that appears more affordable and appealing.

The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 11.68X, reflecting a discount to the broader industry’s 16.42X multiple and the S&P 500’s ratio of 19.99X. Moreover, the company’s current valuation is below its five-year high of 54.79X, suggesting that shares are cheap on a relative basis. The stock’s current Value Score of B validates its appeal.

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How to Play lululemon Stock?

LULU’s drop to a 52-week low and slowing sales growth have raised investor concerns. Ongoing and potential tariffs, along with soft sales guidance, weigh on sentiment. These near-term challenges, coupled with rising costs, create headwinds that warrant caution.

However, the stock’s undervaluation, combined with lululemon’s long-term growth potential, strategic efforts and financial resilience, offer reasons for optimism. The company’s focus on brand strength, digital enhancements and store optimization positions it well for future success.

For investors seeking exposure to the textile apparel industry, lululemon recent stock decline presents a buying opportunity. However, given the near-term pressures, a careful assessment of risks and rewards is essential. The stock currently has a Zacks Rank #3 (Hold).

Key Picks in the Consumer Discretionary Space

Crocs, Inc. CROX, which is a leading footwear company, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CROX delivered a trailing four-quarter earnings surprise of 16.6%, on average. The Zacks Consensus Estimate for Crocs’ current financial-year EPS indicates a rise of 7% from the year-ago number.

Ralph Lauren RL, which is a designer and marketer of premium lifestyle products, currently carries a Zacks Rank #2 (Buy).

RL delivered a trailing four-quarter earnings surprise of 9.7%, on average. The Zacks Consensus Estimate for Ralph Lauren’s current financial-year EPS indicates growth of 31.8% from the year-ago number.

Kontoor Brands, Inc. KTB, which is an apparel company, currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for KTB’s current financial-year EPS is expected to rise 15.6% from the corresponding year-ago reported figure. KTB delivered a trailing four-quarter earnings surprise of 13.9%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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