Lululemon Stock Plunges 48%—Why Experts Say It Could Be the Comeback Buy of the Year
Lululemon shares drop nearly 50% from their peak, but hints of a global rebound may position this athleisure leader for a massive 2025 rally.
- 48% – Drop from 2023 share price peak
- 21% – Q1 revenue growth in China
- $2.60 – Q1 earnings per share (beating expectations)
- 154 – Lululemon stores now open in China
Lululemon Athletica—a brand synonymous with the athleisure revolution—has seen its story take a dramatic twist in 2024 and into 2025. Once the darling of Wall Street, with an eye-popping 1,800% gain since its 2006 IPO, Lululemon now faces mounting pressure as its stock price plunges nearly 50% from late 2023 highs.
For years, Lululemon led the charge in redefining comfortable fashion and outperforming retail rivals. Its influence rippled through major players like Nike and Starbucks, both of which leveraged their upscale appeal to crack the lucrative Chinese market.
Why Did Lululemon Shares Plummet?
In the latest quarterly update, Lululemon posted revenue of $2.37 billion, up 7% year-over-year. Operating income nudged higher, and gross margins improved to 58.3%. However, comparable sales growth cooled to just 1%, with the core Americas region actually down 2%.
The main culprit? A swift slowdown in North American demand, higher operating costs, and renewed U.S.–China trade tensions that triggered fresh tariffs on key materials. Simply raising prices to offset tariffs is no easy fix in a competitive landscape.
Guidance changes rattled investors. Full-year revenue predictions held steady at up to $11.3 billion, but earnings-per-share forecasts slipped from $15.15 to $14.78. Investors quickly punished the stock as short-term profit pressures mounted.
What’s Fueling Lululemon’s China Surge?
Despite stormy waters at home, Lululemon is on fire overseas. The brand’s Chinese business soared with 21% sales growth—four times the global average. Demand for premium Western brands remains sky-high among China’s image-conscious shoppers.
Lululemon now runs 154 stores across China, around 20% of its global footprint, and expects to smash its original target of 200 stores as expansion accelerates. The company’s leadership is bullish, calling their presence in China “early in the journey.”
With stalwarts like Apple and Nike thriving in China, Lululemon’s growth prospects in this market could anchor the next chapter of its global ascent.
Q: Is Lululemon a Smart Investment After This Crash?
Many investors are asking: has the selloff gone too far? At a forward P/E of just 18, Lululemon stock now trades at valuations not seen since the early 2010s. For a brand with elite recognition, robust growth outside North America, and a healthy balance sheet, risk-tolerant investors may see a compelling entry point.
Analysts point out that the pain from tariffs and cost inflation could be temporary. Industry-wide trade tensions are faced by all U.S. apparel giants, and shifting global policies could offer relief by 2026 or earlier.
If Lululemon maintains its brand dominance and international expansion, patient shareholders could eventually be rewarded.
How Should You Play Lululemon Stock in 2025?
Assess your risk tolerance and investment horizon. Consider global headwinds, ongoing trade tensions, and the potential for further store expansion in China and new emerging markets. Watch quarterly updates for signs of renewed growth in the Americas and easing of cost pressures.
For those seeking a strong blend of brand equity and international upside, Lululemon’s battered stock may offer a rare buying opportunity.
Q: What Could Trigger the Next Lululemon Rally?
- Trade tensions easing or tariffs rolled back
- Faster-than-expected recovery in North American demand
- Sustained double-digit growth in China and new global markets
- Successful launch of new product lines or tech-driven shopping experiences
Bottom Line: Lululemon’s iconic brand, rapid expansion in China, and battered valuation set up a potentially explosive comeback in 2025. Stay informed, watch the next earnings, and consider pouncing before the crowd catches on!
Lululemon in 2025 Checklist:
- ✅ Review latest earnings for progress in North America and China
- ✅ Monitor tariff news and trade negotiations
- ✅ Track store expansion goals in key international markets
- ✅ Assess valuation versus historical and peer averages
- ✅ Remain patient for long-term capital gains
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