Lululemon Stock Plummets 57% in 2025, But Analysts See Bargain Amid International Surge

When lululemon athletica inc. reported its second-quarter results in October 2025, investors didn’t just flinch—they ran. The Vancouver-based athletic apparel giant saw its stock plunge 57% year-to-date, making it one of the S&P 500’s worst performers. At $178 per share, its price-to-earnings ratio of 11.3x is the lowest since the 2008 financial crisis. But here’s the twist: some of the smartest retail analysts aren’t selling. They’re buying.

Why the Crash? North America Stalls, Tariffs Bite

The drop wasn’t random. In the second quarter of fiscal 2025, comparable store sales in the Americas fell 4%. Revenue growth? Barely 1%. Meanwhile, the company’s gross margin is expected to shrink by 300 basis points—$240 million in losses tied directly to the U.S. government’s elimination of the $800 de minimis tariff exemption for small packages. That policy change, rolled out earlier this year, hit hard. Every online order from China, Vietnam, or Bangladesh now carries a new tax burden. For a brand built on global supply chains, it’s like adding a 10% surcharge to every yoga pant.

Add to that rising SG&A costs from digital ad spending and new store openings, and you’ve got a perfect storm. Middle-class shoppers, once loyal to premium athleisure, are tightening belts. And in May, lululemon quietly axed its dividend—a signal to markets that cash conservation, not shareholder returns, was now the priority.

The Silver Lining: China, Mexico, and the Global Push

But while North America sputters, the rest of the world is roaring. International comparable store sales jumped 15% in Q2. In China? A stunning 17% surge. Revenue there climbed 25%. Mexico? 18 new stores opened in the past year alone, with double-digit growth in every region. The company’s international footprint now accounts for nearly 20% of total revenue—and growing faster than ever.

This isn’t luck. It’s strategy. lululemon athletica inc. has spent two years retooling its product engine: shortening design cycles, reviving dormant categories like running tights, and launching collections tailored to local tastes. In Shanghai, they introduced moon-inspired leggings with moisture-wicking tech adapted for humid summers. In Mexico City, they partnered with local fitness influencers to build community-led yoga events.

Analysts Say It’s Undervalued—Here’s Why

On November 25, 2025, Janine Stichter, Senior Research Analyst at BTIG, reaffirmed a "Buy" rating with a $303 price target. That’s 70% upside from current levels. Why? Because the numbers beneath the stock price tell a different story.

lululemon athletica inc. generated $1.16 billion in free cash flow last year. By 2030, projections suggest that number will hit $1.6 billion. A simplywall.st DCF analysis puts the company’s intrinsic value at 28.2% higher than its current market cap. Its valuation score? 5 out of 6. In plain terms: the market is pricing it like a dying brand, when its cash flow engine is just warming up.

Even Zacks, usually cautious, notes that while fiscal 2025 EPS is expected to drop 11.9%, the long-term trend line still points upward. And here’s the kicker: the company’s inventory turnover is improving. Unsold inventory? Down 12% from last year. That means less markdowns, healthier margins ahead.

What’s Next? The December 11th Catalyst

The next big moment comes on Thursday, December 11, 2025, at 4:30 p.m. Eastern time, when lululemon releases its third-quarter fiscal 2025 results. Analysts will be watching three things:

• Whether international growth can offset North American weakness
• If gross margins show signs of stabilization after the tariff shock
• How much of the $240 million tariff hit was one-time versus structural

They’ll also listen for updates on the company’s "lululemon Gives" initiative—a mental health and mindfulness program backed by partnerships with the Canadian Olympic Committee and Canadian Paralympic Committee for the 2026 Milano Cortina Winter Games. It’s not just PR. It’s brand DNA. And in a world tired of transactional commerce, emotional connection is the new loyalty engine.

The Bigger Picture: Athleisure Isn’t Dead—It’s Evolving

The athleisure boom of 2020? That was a pandemic-fueled spike. What we’re seeing now is the maturation of the category. Consumers don’t want just leggings—they want purpose. Performance. Sustainability. Community.

lululemon isn’t losing relevance. It’s in transition. The same brand that sold $248 leggings in 2018 is now selling $198 yoga mats with recycled ocean plastic. It’s testing subscription models for gear refreshes. It’s partnering with mental health apps. This isn’t decline. It’s reinvention.

The market’s punishing it for short-term pain. But history shows: when companies like Nike or Under Armour hit similar lows, the best buys came when everyone else was running for the exits.

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