Lululemon Is Down 49% From Its All-Time High. Should You Buy Before Sept. 3?
Key Points
Lululemon reports its fiscal second-quarter results in two weeks.
Expectations are low, with the chain's own guidance for a small decline in revenue and a large drop in earnings.
With a new CEO coming in, hopes for a turnaround could be on the rise.
- 10 stocks we like better than Lululemon Athletica Inc. ›
It's time for Lululemon Athletica (NASDAQ: LULU) to show us if its financial results can stretch as well as some of its signature yoga gear and fitness apparel. Lululemon reports its 2026 fiscal second-quarter results after the market close on Sept. 3.
Expectations are low, and understandably so for a stock that has been cut nearly in half from its December high. Lululemon's own guidance from early June calls for $2.450 billion to $2.475 billion in revenue, a 2% to 3% decline. Its per-share profit forecast of $1.76 to $1.81 for the quarter is well below the $3.10 it posted for the same quarter last summer.
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It's a downward-facing dog
Investors of the struggling retail stock could use a break. After five fiscal quarters of uninspiring single-digit revenue growth, Lululemon is bracing investors for only its second quarterly decline since going public 19 years ago. The only other time this happened was the first quarter of the COVID-19 shutdown.
Bulls will argue that Lululemon is cheap, trading for just 9 times trailing earnings. However, that's a flimsy argument when the bottom line has declined for five consecutive quarters. The chain's guidance predicts that the streak will extend to six reports in two weeks. Lululemon's forward earnings multiple is just above 10 right now.
Hoping for a cobra pose
The good news is that the pessimism is already baked into today's share price. Lululemon has lost a lot of key hires -- including its chief AI and technology officer last week, bolting after less than a year at the retailer -- but that also results in fresh thinking.
There is change coming, even at the top. Former Nike executive Heidi O'Neill will begin leading the company on Sept. 8, a few days after its fiscal second-quarter update. She won't have to return to Lululemon's heady days of growth to make the stock a market beater again. Simply reversing the negative sales and earnings trends could be enough. Namaste.
Should you buy stock in Lululemon Athletica Inc. right now?
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Rick Munarriz 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.
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