Consumer Discretionary

Jefferies says data shows Lululemon’s brand strength waning and competition rising which should slow growth and pressure margins and earnings. The analysts say in a research note that the company is facing some of the issues that caused the downfall of Under Armour. They believe Lululemon is losing incremental share to Alo Yoga and Vuori, that fashion in bottoms is shifting to wide-leg and that the entrance into the Mirror business and footwear sector were mistakes. The result, according to the analysts, is that Lululemon’s total sales growth average, which was greater than 30% over the last 12 quarters, is now about 10%. Jefferies, with an underperform rating on the stock, lowers the price target to $240 from $300. Shares are down 2.5% to $364.82.

A slowdown in the North American sportswear market shows Lululemon Athletica’s stock is overvalued, Jefferies analyst Randal Konik says in a research note. The maker of workout gear’s core consumer faces incremental pressures, and while its market share expansion in China is encouraging, the highly competitive nature of that market could make it more difficult to drive higher market share across the region. That would likely make investors be incrementally more focused on slower growth in the U.S. rather than healthy international results, Konik says. “We believe sales growth rates and store productivity are at peak levels, suggesting financial results could be more volatile from here.” Jefferies sees Lululemon’s top-line trends healthy, but expects a deceleration in the 2H of 2025. Shares fall 2.5% to $364.82.

Lululemon Athletica’s (LULU) stock sell off following indications of slower sales growth is likely overdone, Oppenheimer said Friday in a note to clients. “We studied carefully trends at LULU and revisited our stance on the story. Our advice: stick with LULU,” said Oppenheimer analysts including Brian Nagel. The investment firm kept its outperform rating on the company, while cutting the price target to $445 from $540. “While a fresh cloud of uncertainty now hangs over LULU, underlying growth dynamics for the brand appear intact, improved innovation and marketing should bolster sales expansion, at least somewhat, nearer-term, and share valuations are tracking close to historic troughs,” the analysts said. The company is still Oppenheimer’s preferred larger cap pick inside the athleisure and sporting goods space, the note said.