Sunday Stock: Lulu Inc.

Author: Isa Serna     |     Graphics: Tessie Ulman

Lululemon Athletica Inc (NASDAQ: LULU)

Share Price: $100.61 USD

Market Cap: $11.14B USD

Background: Lululemon was founded in Vancouver in 1998 for the purpose of yoga-focused athletic apparel. At the time, athletic apparel companies were not considered to be in the fashion category, but Lululemon's entrance was critical in the development of athleisure as fashion, making it culturally relevant. The brand is especially known for its leggings and has created a loyal community around fitness and wellness. Now, Lululemon has expanded globally and into categories including menswear, footwear, running, and accessories.

Current News: Lululemon had quite the week after releasing its second-quarter earnings on Thursday. Revenue fell 4% to $2.42 billion, while comparable sales declined 9%. Lululemon's most important market, the Americas, was particularly weak, with revenue down 8% and comparable sales down 12%. The company also lowered its full-year outlook and now expects revenue to decline by up to 7% in 2026.

As a result, shares went down about 17% on Friday, reflecting investors' quick reactions. This brought the stock to its lowest level in eight years. A huge concern in the performance of the brand is the leggings category, where sales declined by around 20%. Leggings should be Lululemon's strongest category, but with competitors like Alo and Vuori continuing to gain attention and market share, they have struggled. Lululemon, once the clear leader of the athleisure category, has now lost some of its cultural relevance and no longer takes the top spot.

In two days, CEO Heidi O'Neill, a former Nike executive, will take over, and all the attention is on her. Her biggest challenge will be bringing the excitement back to Lululemon through stronger products and marketing while competing in an overcrowded athleisure market.