Lululemon (LULU) Stock Craters 45% — Can a New CEO Turn It Around?

TLDR

• LULU stock is down 45% year to date and 60% over the past five years, making it one of the S&P 500’s worst performers
• Same-store sales in constant currency fell for the first time since the initial pandemic shutdown in 2020
• Management cut guidance following the weak quarter, sending the stock down 9%
• The CEO stepped out in January; Nike veteran Heidi O’Neill won’t take over until September due to noncompete restrictions
• A cultural misstep at a China event — using a Japanese drum in a Chinese campaign — drew 50 million social-media views and an apology

Lululemon Athletica stock is trading around 10 times forward earnings — less than half the valuation of the broader market. That’s a long way from the 36 times it commanded not long ago.

Lululemon Athletica Inc., LULU

The stock has dropped 45% so far in 2026 and is down 60% over the past five years. Among S&P 500 companies, that puts it ninth and 12th worst in those respective periods.

LULU topped $500 per share at the end of 2023. From its 2007 IPO price of $18, investors who held through that run made over 3,500%.

Revenue is still north of $11 billion. But peak profit came in the fiscal year ended January 2025, and the trajectory since then has been rough.

Last quarter, same-store sales in constant currency fell for the first time since the initial pandemic shutdown in 2020. Management responded by slashing guidance, and the stock dropped 9%.

Jefferies analyst Randal Konik has been flagging problems at Lulu for years. He says the brand has drifted from its core leggings business into regular clothing — “ankle-length skirts, like Little House on the Prairie,” is how he put it.

Konik also points to logo placement as a misstep. Prominent branding on clothing conflicts with what younger consumers want, which is a cleaner, more minimalist look.

The color palette in stores is another issue. A scattered range of colors can turn shoppers off, and louder hues carry more fashion risk.

Leadership Gap

The former CEO stepped down in January. Two senior executives are running things in the interim while Nike veteran Heidi O’Neill prepares to step in — but noncompete restrictions push her start date to September.

That’s a long time to run a company through a rough patch without a permanent leader.

Founder Chip Wilson, who still holds a stake, has been a thorn in management’s side. He has criticized diversity initiatives, challenged strategy publicly, and pushed for board seats in proxy battles.

China Misstep

At the end of May, Lululemon hosted a yoga event near the Great Wall in China. The event featured a local celebrity posing next to a traditional drum with Lulu branding — which turned out to be a Japanese drum.

The backlash spread fast. The post racked up 50 million social-media views, with criticism ranging from cultural insensitivity to references to Japan’s wartime history in China. Lululemon issued an apology.

It wasn’t a great look for a brand already under scrutiny.

Konik’s current top pick is Yeti Holdings, not Lululemon. He notes that On Holding carries a similar market cap to LULU — and he views On as expensive given its fashion risk and questions about its ability to expand beyond footwear.

Lululemon’s new CEO isn’t in the building yet. The next earnings report will be a key test of whether the brand’s sales trend is stabilizing.

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