Here’s Why Lululemon Athletica (LULU) Fell in Q3

Core Insights - Diamond Hill Capital's "Large Cap Fund" underperformed the Russell 1000 Value Index in Q3 2025 despite the Russell 3000 Index gaining 8% year-to-date, bringing calendar-year returns to over 14% [1] Company Performance - Lululemon Athletica Inc. (NASDAQ:LULU) experienced a one-month return of -3.40% and a significant decline of 46.85% over the last 52 weeks, closing at $167.59 per share with a market capitalization of $19.874 billion on November 5, 2025 [2] - The company faced challenges with its merchandise strategy, requiring a reset of its strategic plan and delaying expected reacceleration due to increased competition, evolving fashion trends, and tariff impacts [3] Investment Sentiment - Lululemon was not included in the list of the 30 Most Popular Stocks Among Hedge Funds, although the number of hedge fund portfolios holding the stock increased from 48 to 55 in the second quarter [4] - The investment community is leaning towards AI stocks, which are perceived to offer greater upside potential and less downside risk compared to Lululemon [4]