Lululemon Stock May Be Down 57% This Year, But Is It Out?

Core Viewpoint - Investors are concerned about Lululemon's future despite its recent sales growth and stable margins, as the company faces significant headwinds impacting its profitability and growth expectations [1][3][4]. Group 1: Business Performance - Lululemon's sales in Q2 2025 were up, with diluted earnings per share (EPS) only down 1.5%, yet the stock is underperforming in the S&P 500 [1][3]. - The company initially projected $11.2 billion in revenue for 2025 but has revised this estimate down to a maximum of $11 billion after Q2 [6]. - The original EPS guidance was $14.95 to $15.15, which has now been reduced to $12.77 to $12.97, reflecting a 14% decrease from the previous midpoint [7]. Group 2: Market Challenges - Lululemon's primary markets, the United States and Canada, are experiencing stalled growth due to previous successes, making current growth appear weak [5]. - Import tariffs, particularly on apparel manufactured overseas (mainly in Vietnam), are expected to reduce gross profit by $240 million in 2025, with potential for greater impact in the following year [5]. Group 3: Brand Perception - Lululemon maintains a net promoter score (NPS) of 42, indicating a strong fan base, and this score has remained stable over the past year [10].