That Dip In Lululemon Stock Looks Cheap, But What If Leggings Keep Sliding?
Lululemon Athletica (LULU) has fallen about 22% since late August and now trades at its lowest price in the past year. Is that a chance to buy? Its own record says dips here have paid off more often than not. The catch is that the recent ones have not. And Lululemon’s own women’s leggings sales, in a category it leads, fell about 20% in fiscal Q2 2026.
How Did Past Lululemon Dips Actually Work Out?
Since 2010, Lululemon has fallen 20% or more within 30 trading days on 20 separate occasions. Of the 16 dips with a full year of results, 9 ended higher twelve months later. The median one-year return was 17%. The other four are too recent to judge.
The year after a dip was rarely smooth. After a dip, the stock fell a median further 17% at its worst, and took a median of 224 calendar days, about seven months, to reach its high within the following year. The worst single episode fell another 53%.
All four dips from 2024 and 2025 with a full year of data ended lower. The record rewards patience, but lately it has not.
LULU had 20 events since 1/1/2010 where the dip threshold of -20% within 30 days was triggered
- 34% median peak return within 1 year of dip event
- 224 days is the median time to peak return after a dip event
- -17% median max drawdown within 1 year of dip event
| Period | Past Median Return |
|---|---|
| 1M | -1.2% |
| 3M | 6.6% |
| 6M | -1.6% |
| 12M | 17.3% |
| 30 Day Dip | LULU Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | LULU | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 17% | 34% | -17% | 224 | ||||
| 9152026 | -20% | -0% | -2% | 0 | ||||
| 5042026 | -21% | 11% | -26% | 3 | ||||
| 2032026 | -20% | 2% | -44% | 17 | ||||
| 10162025 | -20% | 2% | 31% | -42% | 82 | |||
| 6232025 | -20% | 7% | -50% | 9% | -53% | 9 | ||
| 3112025 | -21% | -7% | -50% | 7% | -51% | 16 | ||
| 7252024 | -22% | 1% | -17% | 70% | -17% | 189 | ||
| 4052024 | -22% | 2% | -31% | 18% | -35% | 300 | ||
| 5122022 | -22% | -14% | 28% | 32% | -12% | 358 | ||
| 12202021 | -21% | -3% | -17% | 9% | -31% | 120 | ||
| 3122020 | -31% | -24% | 81% | 135% | -18% | 174 | ||
| 12212018 | -21% | -14% | 101% | 105% | -0% | 355 | ||
| 3302017 | -24% | 1% | 72% | 76% | -6% | 364 | ||
| 9282016 | -20% | -0% | -5% | 10% | -25% | 104 | ||
| 9282015 | -23% | -10% | 28% | 60% | -12% | 326 | ||
| 1132014 | -29% | 1% | 27% | 27% | -25% | 365 | ||
| 6212013 | -22% | -2% | -33% | 24% | -40% | 104 | ||
| 6142012 | -24% | -5% | 8% | 36% | -12% | 361 | ||
| 12132011 | -21% | -2% | 66% | 79% | -3% | 142 | ||
| 8182011 | -21% | -15% | 32% | 67% | -9% | 259 | ||
[2] Analysis for period from 1/1/2010 to 9/16/2026
Is Lululemon Still A Sound Business With Leggings Sliding?
On trailing numbers, it passes. Over the last twelve months, the company turned 17.9% of its revenue into operating cash flow. The business clears every basic quality check.
Where sales are heading is less comfortable. Management now expects fiscal 2026 revenue to fall 5% to 7% from 2025. This is a healthy business that is shrinking, not a broken one.
In women’s leggings, where Lululemon remains the market leader, sales fell about 20% in fiscal Q2 2026. Management says shoppers are shifting to away-from-body styles, and those are not yet fully offsetting the decline. The quarter’s revenue fell short of management’s expectations mainly because of Mainland China, where negative commentary in the media and on social channels hurt traffic.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 1.7% | Pass |
| Revenue Growth (3-Yr Avg) | 8.0% | Pass |
| Operating Cash Flow Margin (LTM) | 17.9% | Pass |
So Is This Drop Different From The Ones That Paid Off?
The case for buying is real. At about 9 times earnings, against roughly 22 for the S&P 500, the stock is cheap next to the market, though that multiple is already being paid on the lower, tariff-boosted guide, not on 2025’s $13.26.
But earnings are falling. Management guides fiscal 2026 earnings per share to $9.48 to $9.73, down from $13.26 in 2025, and that range includes $0.86 from tariff refunds booked in fiscal Q2 2026. A low multiple on a shrinking profit is less of a bargain than it looks. A new CEO, who was due to start the week after the 3 September call, is also expected to review the strategy.
So far, this drop looks more like the recent dips that ended lower than the older ones that paid off. The next evidence is the fiscal Q3 2026 report, expected around December 9. Watch North America revenue, which management expects to fall in the mid-teens in fiscal Q3 2026.
So Do You Buy Lululemon Now Or Wait For Proof?
Being unsure here is the right reaction. The valuation looks cheap, yet the recent dips in this stock still ended lower. Buying a brand mid-repair means sitting through quarters that may look worse first. On that record, waiting for the fiscal Q3 2026 report around December 9 is the more careful choice.
There are two ways to make this risk smaller. One is to stop judging this dip alone: our Buy The Dip rankings set recent declines against how drops of that size have played out.
The other is to stop making the call stock by stock. That is the idea behind the Trefis High Quality Portfolio: quality names, sized with discipline, so no single dip decides your year. That portfolio has a track record of outpacing the three major indices.