Lululemon Stock Sinks to $96: Is It a Buy Yet?

Lululemon stock hit a record high of $511.29 in late December 2023, but today it trades around $96—a stunning 81% decline. The company's growth story has unraveled as revenue growth slowed from 30% in fiscal 2022 to just 5% in fiscal 2025, and comparable store sales growth fell from 16% to 2% over the same period.

For fiscal 2026, management expects revenue to decline 5%-7% and earnings per share to plunge 27%-29%. The pain is concentrated in North America, where women's apparel sales are weak amid tough competition from upstarts like Alo Yoga and Vuori. Inflation and tariffs are also squeezing consumers, forcing Lululemon to rely more on markdowns, which dilutes its premium brand image.

Overseas growth is stronger but not enough to offset North American weakness. The recent hiring of former Nike executive Heidi O'Neill as CEO didn't boost confidence, given Nike faces similar challenges. Lululemon is trying to stabilize by reducing markdowns, slowing store expansion, and launching new marketing campaigns, but the turnaround is far from certain.

At $96, Lululemon trades at less than 10 times this year's earnings—a historically low valuation. But that discount reflects real problems: declining sales, shrinking margins, and intense competition. The company's premium positioning is under threat as it leans on discounts to move product.

Investors might be tempted to call this a contrarian buy, but the risks are substantial. The North American market remains weak, and the turnaround plan—reining in markdowns, expanding into looser-fitting apparel, and boosting marketing—could take years to pay off. Meanwhile, earnings are expected to fall sharply this year.

For the stock to recover, Lululemon needs to stabilize its comparable sales and prove it can compete without heavy discounting. Until then, the low valuation alone isn't enough to justify buying. The market is waiting for concrete signs of a turnaround, and those haven't appeared yet.