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Lululemon Drops 54% YTD, Is LULU Stock Too Cheap to Ignore?
lululemonlululemon(US:LULU) Yahoo Financeยท2025-09-29 14:58

Core Viewpoint - Lululemon Athletica has experienced a significant decline in stock value, dropping approximately 53.5% year-to-date due to a slowdown in U.S. sales and challenges in the apparel industry [1][2]. Company Performance - The primary reason for the decline in Lululemon's stock price is the slowdown in the U.S. market, where consumers are reducing spending on apparel, especially performance wear [2][5]. - Management has noted that the brand has become too predictable, particularly in its casual lines, and has not been successful in setting new trends [2][3]. - The company's lounge and social offerings have not generated the same enthusiasm as before, indicating a disconnect between the product pipeline and customer preferences [3]. Industry Challenges - The athletic apparel market is facing intensified competition from both established brands and new entrants, which is impacting Lululemon's market share [4]. - Tariffs have introduced unexpected costs, particularly as two-thirds of Lululemon's U.S. e-commerce orders are shipped from Canada, which previously benefited from tariff exemptions that have now been removed [4]. - The company is attempting to mitigate these costs through pricing adjustments, vendor negotiations, and cost-cutting initiatives, but these measures will take time to yield results [5]. Valuation Insights - Following the significant selloff, Lululemon's stock is trading at a forward price-earnings ratio of 13.3x, which is considered historically cheap for a company known for strong growth and solid brand power [6].