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Can Category Expansion Help lululemon Escape Athleisure Saturation?
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Key Takeaways
LULU saw just 1% comps growth and 2% U.S. revenue growth in 1Q25 amid domestic market saturation.
New product lines like Daydrift and BeCalm aim to broaden appeal across yoga, run, train, golf and tennis.
International sales rose 22% in China and 17% in the rest of the world, showing growth outside North America.
As the U.S. athleisure market shows signs of maturity, lululemon athletica inc. (LULU - Free Report) is betting big on category expansion to reinvigorate growth. Despite reporting just 1% comparable store sales (comps) growth and 2% U.S. revenue growth in first-quarter fiscal 2025, the brand continues to gain market share in premium activewear, buoyed by strong guest response to newness across both performance and lifestyle offerings.
Innovations like the No Line Align and new lines such as Daydrift and BeCalm are helping broaden its appeal beyond core staples, as the company emphasizes product newness and technical solutions across its five key activities — yoga, run, train, golf and tennis.
lululemon’s strategic evolution includes a focus on franchise development, evident in the success of limited-distribution launches now being scaled. The brand is also optimizing its merchandise mix by shifting away from seasonal colors to silhouettes that offer differentiated value. While traffic trends remain soft, particularly in U.S. stores, the company is chasing demand where it sees momentum, evidenced by rapid sellouts and strong online and in-store response to innovation-driven offerings.
Looking ahead, lululemon is not only relying on product variety but also strengthening its global footprint. Growth in China (up 22%) and the rest of the world (up 17%) reflects ample whitespace internationally. As consumer behavior in North America grows more selective, lululemon’s ability to innovate in underpenetrated categories and expand internationally may prove critical to escaping domestic saturation and sustaining long-term growth. The brand remains agile, adjusting inventory, pricing and assortment to keep pace with a shifting market landscape.
Are LULU’s Rivals Feeling the Heat in a Mature Athleisure Market?
As lululemon navigates slowing U.S. sales in a saturated athleisure market, investors are increasingly asking whether giants like NIKE Inc. (NKE - Free Report) and Under Armour (UAA - Free Report) are feeling similar pressure from shifting consumer demand and heightened competition.
NIKE’s athleisure business is feeling the strain of a maturing market, as the fourth-quarter fiscal 2025 results showed a sharp 12% revenue decline and a 26% drop in NIKE Digital, which houses much of its lifestyle and athleisure assortment. While NIKE is repositioning toward core sports and performance, its sportswear segment, where the overlap with lululemon is most apparent, has also declined. The company is now leaning into sport-led assortments to rebalance its portfolio and drive growth.
Under Armour is facing headwinds from a saturated athleisure market, particularly in North America, where fourth-quarter fiscal 2025 sales declined 10% and lifestyle categories underperformed. Management highlighted challenges in attracting style-focused consumers, a segment where lululemon excels. While UAA’s core remains performance-driven, its athleisure offerings in training and activewear directly overlap with lululemon. The brand is now focused on improving design relevance and tightening distribution to stay competitive in a crowded landscape.
The Zacks Rundown for LULU
lululemon’s shares have lost 40.9% year to date compared with the industry’s decline of 26.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 15.04X, significantly higher than the industry’s 11.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for lululemon’s fiscal 2025 earnings implies a year-over-year decline of 1%, whereas the consensus mark for fiscal 2026 suggests growth of 8.3%. Earnings estimates for fiscal 2025 and 2026 have been southbound in the past 30 days.
Image: Bigstock
Can Category Expansion Help lululemon Escape Athleisure Saturation?
Key Takeaways
As the U.S. athleisure market shows signs of maturity, lululemon athletica inc. (LULU - Free Report) is betting big on category expansion to reinvigorate growth. Despite reporting just 1% comparable store sales (comps) growth and 2% U.S. revenue growth in first-quarter fiscal 2025, the brand continues to gain market share in premium activewear, buoyed by strong guest response to newness across both performance and lifestyle offerings.
Innovations like the No Line Align and new lines such as Daydrift and BeCalm are helping broaden its appeal beyond core staples, as the company emphasizes product newness and technical solutions across its five key activities — yoga, run, train, golf and tennis.
lululemon’s strategic evolution includes a focus on franchise development, evident in the success of limited-distribution launches now being scaled. The brand is also optimizing its merchandise mix by shifting away from seasonal colors to silhouettes that offer differentiated value. While traffic trends remain soft, particularly in U.S. stores, the company is chasing demand where it sees momentum, evidenced by rapid sellouts and strong online and in-store response to innovation-driven offerings.
Looking ahead, lululemon is not only relying on product variety but also strengthening its global footprint. Growth in China (up 22%) and the rest of the world (up 17%) reflects ample whitespace internationally. As consumer behavior in North America grows more selective, lululemon’s ability to innovate in underpenetrated categories and expand internationally may prove critical to escaping domestic saturation and sustaining long-term growth. The brand remains agile, adjusting inventory, pricing and assortment to keep pace with a shifting market landscape.
Are LULU’s Rivals Feeling the Heat in a Mature Athleisure Market?
As lululemon navigates slowing U.S. sales in a saturated athleisure market, investors are increasingly asking whether giants like NIKE Inc. (NKE - Free Report) and Under Armour (UAA - Free Report) are feeling similar pressure from shifting consumer demand and heightened competition.
NIKE’s athleisure business is feeling the strain of a maturing market, as the fourth-quarter fiscal 2025 results showed a sharp 12% revenue decline and a 26% drop in NIKE Digital, which houses much of its lifestyle and athleisure assortment. While NIKE is repositioning toward core sports and performance, its sportswear segment, where the overlap with lululemon is most apparent, has also declined. The company is now leaning into sport-led assortments to rebalance its portfolio and drive growth.
Under Armour is facing headwinds from a saturated athleisure market, particularly in North America, where fourth-quarter fiscal 2025 sales declined 10% and lifestyle categories underperformed. Management highlighted challenges in attracting style-focused consumers, a segment where lululemon excels. While UAA’s core remains performance-driven, its athleisure offerings in training and activewear directly overlap with lululemon. The brand is now focused on improving design relevance and tightening distribution to stay competitive in a crowded landscape.
The Zacks Rundown for LULU
lululemon’s shares have lost 40.9% year to date compared with the industry’s decline of 26.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 15.04X, significantly higher than the industry’s 11.19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for lululemon’s fiscal 2025 earnings implies a year-over-year decline of 1%, whereas the consensus mark for fiscal 2026 suggests growth of 8.3%. Earnings estimates for fiscal 2025 and 2026 have been southbound in the past 30 days.
Image Source: Zacks Investment Research
LULU currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.