Lululemon Stock Is Down 48% in 2026. Is It a Buy Before 2027?

After a year of declining sales and a CEO change, Lululemon Athletica (NASDAQ: LULU) shareholders will likely be happy to put 2026 behind them. The stock price hasn't fared well either, falling 48% year to date. But unfortunately, 2027 may not look drastically different.

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The challenges ahead

On Sept. 8, Heidi O'Neill took over as CEO. She's a veteran in the apparel industry, having held high-level positions at both Nike (NYSE: NKE) and Levi Strauss. That said, it takes time for any new CEO to get a full feel for the business they are taking control of and then implement the changes they want to see. It's still too early for O'Neill to have shaped that direction and put the company on the path to success.

The company is also dealing with slumping sales. In its fiscal 2026 second quarter, net revenue was down 4% year over year to $2.4 billion, while gross profit declined by 1% to $1.5 billion.

In the near term, it doesn't look like the company has much on the horizon that would help it reverse its sales decline, and that issue is likely to follow the company into the upcoming investing year. With all that in mind, this is not a stock I would buy before the end of 2026. That said, there is another company in the space I am actively watching.

A competitor to keep an eye on

Lululemon competitor Nike has also struggled this year, with its stock price down 38.6%. Its struggles are also likely to continue, as the company said in its 2027 fiscal first-quarter report on Oct. 1 that it expects its full-year revenue to drop by a high-single-digit percentage.

Between the two companies, however, Nike offers a more appealing investment path. Both retailers are transitioning from being high-growth companies to more mature operators, but Nike is already acting like a mature company, and I mean that in a favorable way. It has increased its dividend payouts annually for the last 24 consecutive years. Additionally, at the current share price, that dividend currently yields a hefty 4.1%. Lululemon, by contrast, does not pay a dividend.

However, I still wouldn't buy Nike before the end of 2026, nor would I buy it in early 2027. The athletic apparel giant still needs to find a way to address its sales issues in Greater China and revitalize its classic brands while also innovating and keeping pace with changing consumer tastes. That's a long list of issues to fix, which is why I'd be fine sitting on the sidelines until it can demonstrate more progress. But between the two, I'd rather own the one that has built a track record of reliable dividend growth.

Jack Delaney 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.