Lululemon Athletica: Hold Rating Amid Bold Product Strategy and Market Challenges
Aneesha Sherman has issued a Hold rating for Lululemon Athletica, citing concerns over its bold new product strategy launching in Spring 2026, which relies on an unproven designer and carries significant risks. The U.S. market trends are deteriorating, and while the Chinese market shows potential, it cannot compensate for U.S. challenges. Expected low single-digit EPS growth in FY26 and margin pressures have led to a valuation adjustment. The stock's short-term boost from the Amex partnership is noted, but long-term success depends on the new strategy's performance.
Aneesha Sherman has given her Hold rating due to a combination of factors affecting Lululemon Athletica’s current and future performance. The company’s new product strategy, which is set to launch in Spring 2026, is considered bold and risky, with a significant portion of the lineup coming from an unproven designer. This strategy introduces higher fashion and markdown risks, and with no clear evidence of its potential success, there is a lack of confidence in the bullish outlook.
Additionally, while the Chinese market shows resilience and potential for growth, it is not sufficient to offset the challenges faced in the U.S. market. The U.S. trends are deteriorating, and growth appears to be heavily reliant on the new product strategy. With expected low single-digit EPS growth in FY26 and pressure on margins due to operating deleverage and markdowns, the stock’s valuation has been adjusted to reflect these uncertainties. The short-term boost from the Amex partnership is noted, but the long-term success hinges on the 2026 product strategy.
According to TipRanks, Sherman is a 3-star analyst with an average return of 4.9% and a 48.78% success rate. Sherman covers the Consumer Cyclical sector, focusing on stocks such as Nike, Lululemon Athletica, and On Holding AG.
