Nike vs. Lululemon: Which Stock Is a Better Buy for the Last 2 Months of 2026?

Two of the biggest names in athletic apparel are down about 40% and 50% this year, and neither one is hiding from it. Nike (NYSE: NKE) and Lululemon Athletica (NASDAQ: LULU) have both spent 2026 in a stretch most investors would rather forget: shrinking sales, cut guidance, and a stock chart that looks more like a cliff than a trend line.

The question isn't which company had a good year, because the answer is neither. The question is which one gives you a stronger case to own for the final two months of the year.

Image source: Getty Images.

Nike: ugly numbers, but a plan with teeth

Nike's fiscal first-quarter revenue fell 4% to $11.21 billion, missing estimates, and Greater China sales dropped 26% for a ninth straight quarterly decline. Management guided to a high-single-digit revenue drop for the full fiscal year, worse than what analysts had penciled in, and adjusted earnings guidance of $1.15 to $1.35 a share sits well below the general consensus. None of that paints a pretty picture.

Here's what caught my attention, though: Gross margin expanded 60 basis points to 42.8%, driven by lower warehousing and logistics costs, even as sales fell. CEO Elliott Hill's "Win Now" turnaround has a concrete restructuring effort behind it, the "Pace" program, targeting $2.5 billion in savings through fiscal 2031 against roughly $1 billion in pretax charges. North America grew 2%, a detail the company credited in part to the World Cup. A business that can grow margin while revenue shrinks is doing something right at the cost level, and that matters more than a single quarter's top line.

Lululemon: a beat that wasn't what it looked like

Lululemon's second-quarter results came with a 20% stock drop on the same day, and the headline numbers explain why. Revenue fell 4% to $2.4 billion, comparable sales dropped 9%, and the company slashed full-year earnings per share (EPS) guidance to $9.48 to $9.73, down from $10.95 to $11.15. North American revenue fell 8%, and leggings, the category the brand built its name on, saw sales drop 20%.

The adjusted EPS of $2.06 beat most analyst expectations on paper, but strip out a tariff refund and an interest benefit worth $0.86 a share, and the beat disappears, per Investing.com. That's the part worth sitting with: The headline number looked fine, but the operating business underneath is missing by more than it seemed. Add a leadership change, with Heidi O'Neill taking over as CEO right as the core product line weakens, and you get a company making a leadership transition at the exact moment it needs steady hands.

My call for the next two months

I like the products of both of these companies. I wear Lululemon pants and run in Nike shoes. Both stocks are also cheap by their own recent history, and both carry real risk heading into the holiday season. But I'd lean toward Nike here. Its margin expansion is a genuine signal, not an accounting footnote, and its restructuring plan comes with specific numbers attached rather than vague promises. Nike also sells into a global footprint, which gives it more room to offset a weak region with a strong one, an option Lululemon doesn't have with North America carrying most of its business.

Lululemon isn't a broken company, and a new CEO can turn a business around. But buying into a management transition during a 9% comparable sales decline, with an earnings beat propped up by one-time items, asks an investor to bet on change that hasn't happened yet. I also think Nike has much bigger brand recognition than Lululemon.

Buying into Nike this fall asks you to bet on a plan that's already producing one real result: margins moving in the right direction while everything else gets fixed. For the final stretch of 2026, I'd rather own the company proving its turnaround with numbers than the one promising it with a new name in the corner office.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy.