Lululemon Analyst Is No Longer Bullish Due To Business Decline, Tariffs, Competition
Analyst Tom Nikic downgraded Lululemon Athletica Inc's rating from Buy to Hold due to a decline in business momentum and increased competition. Despite hopes for a turnaround in 2025, the company's North America comps worsened, with a 3% decline in Q2 2025. Nikic noted that tariffs have impacted the company more than expected, and current fiscal 2026 expectations may be too high, indicating potential downside risk. Lululemon shares fell 1.57% to $176.40 at publication.
While a turnaround in Lululemon Athletica Inc's (NASDAQ: LULU) U.S. business seemed likely last year, the momentum did not continue into 2025, according to Needham.
The Lululemon Athletica Analyst: Analyst Tom Nikic downgraded the rating from Buy to Hold, while removing the price target.
The Lululemon Athletica Thesis: Instead of turning around, the company's business has worsened,Nikic said in the downgrade note.
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Lululemon Athletica's North America comps improved to flat in the fourth quarter of 2024, from a 2% decline in the previous two quarters, comps worsened sequentially, declining 1% in the first quarter and 3% in the second quarter of 2025, he added.
"While we were optimistic that new product initiatives would revive the U.S. business in 2025, it appears that the competitive environment is simply too challenging at the moment," the analyst wrote. The company is "far more" impacted by tariffs than was expected, he further stated.
The current Street expectations for fiscal 2026 appear are too high, "so we see more downside risk to numbers over the next six to 12 months even if fundamentals don’t deteriorate any further," Nikic said.
LULU Price Action: Shares of Lululemon Athletica had declined by 1.57% to $176.40 at the time of publication on Thursday.
- Lululemon Shares Seen Fairly Valued As Near-Term Momentum Remains Weak
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