The Motley Foolยท2025-10-30 07:30Core Viewpoint - Lululemon Athletica has experienced a significant decline in market capitalization and stock performance, but there are expectations for a turnaround driven by strategic initiatives and growth in international markets [1][2][3][4]. Company Performance - Lululemon's market cap has dropped to approximately $21 billion, while Adidas has a market cap of about $38 billion, marking a reversal from earlier periods when Lululemon was valued at twice that of Adidas [3][4]. - The company's stock has seen a 53% decline year-to-date, placing it at the bottom of the Consumer Discretionary Select Sector SPDR Fund and near the bottom of the S&P 500 [2]. Strategic Initiatives - Lululemon is focusing on a three-fold acceleration in new product design, development, and production, aiming to increase the percentage of new styles in its overall assortment from 23% to approximately 35% by next spring [8]. - Management has expressed disappointment with U.S. sales performance and is counting on a quicker product development cycle to reignite demand in this key market [8]. International Growth - Lululemon's revenues in China, its second-largest market, increased by 25% year-over-year in Q2, while the rest of its international portfolio saw a 19% rise in sales [9]. - Analysts project Lululemon's full-year revenue will grow from $10.98 billion in fiscal 2025 to $15.62 billion by 2030 [9]. Financial Projections - Adjusted earnings per share are expected to rise from $12.99 to $25.65 over the same period [10]. - Lululemon currently trades at a forward price-to-earnings (PE) ratio of 14 and a price-to-sales ratio of 2, both below their five-year averages [10]. - Long-term investors may find interest in the fact that the PE ratio is projected to drop to just 7 times fiscal 2030 estimates, suggesting potential for valuation multiple expansion as growth returns [11].