Does Lululemon Stock’s Run Make Any Sense Now?
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Lululemon Athletica (LULU) stock returned 19.5% over the month to November 6, 2026, while the S&P 500 lost 4.9%. The advance follows a difficult year, though: the shares are still down 33.9% over twelve months, and management lowered its full-year outlook at its latest earnings call. Since then, Heidi O’Neill has taken over as chief executive, and in October Lululemon named Athleta’s chief executive, Maggie Gauger, its chief product officer. The buyers of the past month are backing a company that expects its sales to shrink in fiscal 2026. So what exactly are those buyers paying for?
Lululemon Buyers Pay For Profits Expected To Shrink
At the November 6 close, buyers paid 8.8 times Lululemon’s earnings over the last twelve months, against 21.8 times for the S&P 500. Those twelve months include the latest quarter, when management said an after-tax tariff refund with interest added $0.86 to earnings per share.
Management now expects earnings per share of $9.48 to $9.73 for the full fiscal year, compared with $13.26 the year before. Even with the refund counted, the forecast is well below that level. The low multiple therefore rests partly on twelve months of profit the company itself does not expect to repeat.
Before the outlook cut, the business was also earning less on its sales than the market. Over the last twelve months, Lululemon kept 17.8% of its revenue as operating profit, against 19.0% for the S&P 500.
What Is Going Wrong With Lululemon’s Sales?
Fewer shoppers are coming in, and some products they used to buy are generating lower sales. Revenue in the quarter ended August 2, 2026, fell 4.3% from a year earlier to $2.42 billion. Management said sales missed its own plan mostly in China Mainland, where negative commentary in the media and on social channels hurt traffic.
Management described women’s bottoms as a mixed area. Management said leggings sales fell about 20% in that quarter, and that shoppers are looking for looser, away-from-body styles. The company also expects a weaker third quarter, forecasting revenue of $2.29 billion to $2.32 billion, down 10% to 11% from a year earlier. Management projects an operating margin of about 6.5% for that quarter, against 17% a year earlier.
Sales are falling, but the case for owners rests on cash. Lululemon generated $1.35 billion of free cash flow over the last twelve months, up from $1.17 billion a year earlier. Management said the company had about $713 million left on its share repurchase program and expects to buy back shares in 2026 at about the same level as in 2025. Shoppers are also responding well to women’s tops such as Scuba and Steady State, management said.
Lululemon’s Next Report Is Expected In December
Lululemon is expected to report results for its third quarter in December 2026. Revenue compared with management’s guide for that quarter is the number to watch in that report. Until then, buyers are paying a low price for profit the company expects to shrink, and for the cash the business produces.
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