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Can lululemon's Premium Apparel Survive Weak U.S. Traffic Trends?
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Key Takeaways
lululemon saw Americas revenues fall 2% y/y in 3Q25, with U.S. sales down 3% and comparable sales off 5%.
LULU cited lower visit frequency, heavier promotions and consumer trade-down as drivers of weak U.S. traffic.
LULU is executing a three-pillar plan and leaning on China momentum, with benefits expected in FY26.
lululemon athletica inc.’s (LULU - Free Report) business model is built around premium apparel positioning, anchored in technical innovation, brand loyalty and full-price selling. The company continues to lead with performance-driven product categories, such as run, train and outerwear, where management cited strong guest response in the third quarter of fiscal 2025.
The company’s ability to command premium pricing is reinforced by its differentiated product pipeline, disciplined markdown strategy and a loyal, high-value customer base, supported by membership programs and brand-led storytelling. This positioning has enabled lululemon to remain the leading women’s activewear brand in the United States while scaling internationally.
However, this premium model is facing pressure from weakening U.S. traffic trends. In third-quarter fiscal 2025, Americas revenues declined 2% year over year, with U.S. sales down 3% and comparable sales falling 5%. Management attributed the softness to reduced visit frequency, increased promotional intensity across the apparel space and signs of consumer trade-down behavior amid a value-seeking environment.
The impact is visible in margin pressure, as higher markdowns and tariff-related costs weighed on profitability. While lululemon continues to attract guests, slower engagement from its core U.S. customer base has tempered near-term growth expectations.
Management is executing a three-pillar action plan focused on refreshing product assortments, elevating in-store and digital experiences and improving enterprise efficiency, with benefits expected to materialize in fiscal 2026. Coupled with robust international momentum, especially in China, lululemon’s premium positioning appears durable, though the U.S. recovery remains the key swing factor for sustained growth.
lululemon is not alone in facing softness in U.S. retail traffic. Its peers, such as Ralph Lauren Corporation (RL - Free Report) and Under Armour Inc. (UAA - Free Report) , with premium-oriented apparel, are grappling with similar headwinds, though with different strategic responses.
Ralph Lauren is navigating weak traffic trends by leaning into brand elevation and disciplined execution. In second-quarter fiscal 2026, management highlighted continued focus on full-price selling, higher average unit retail and reduced promotions, helping offset softer store traffic. Strength in international markets and digital channels further supported the results, while tighter inventory control and selective pricing actions preserved margins despite a cautious consumer backdrop.
Under Armour is responding to weak traffic trends by accelerating its multi-year reset focused on simplifying the business and sharpening brand positioning. In second-quarter fiscal 2026, management emphasized reduced promotional dependence, tighter inventory controls and SKU rationalization to improve sell-through amid softer U.S. demand. The company is also shifting toward premium performance products and a more balanced DTC-wholesale mix, while prioritizing profitability over near-term traffic recovery.
LULU’s Price Performance, Valuation & Estimates
Shares of lululemon have gained 9.4% in the past three months compared with the industry’s growth of 6.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 15.1X compared with the industry’s average of 16.3X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LULU’s fiscal 2025 and fiscal 2026 earnings implies a year-over-year decline of 10.8% and 2.3%, respectively. The company’s EPS estimate for fiscal 2025 has been northbound in the past seven days, while the estimate for fiscal 2026 has been southbound in the same period.
Image Source: Zacks Investment Research
lululemon currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Can lululemon's Premium Apparel Survive Weak U.S. Traffic Trends?
Key Takeaways
lululemon athletica inc.’s (LULU - Free Report) business model is built around premium apparel positioning, anchored in technical innovation, brand loyalty and full-price selling. The company continues to lead with performance-driven product categories, such as run, train and outerwear, where management cited strong guest response in the third quarter of fiscal 2025.
The company’s ability to command premium pricing is reinforced by its differentiated product pipeline, disciplined markdown strategy and a loyal, high-value customer base, supported by membership programs and brand-led storytelling. This positioning has enabled lululemon to remain the leading women’s activewear brand in the United States while scaling internationally.
However, this premium model is facing pressure from weakening U.S. traffic trends. In third-quarter fiscal 2025, Americas revenues declined 2% year over year, with U.S. sales down 3% and comparable sales falling 5%. Management attributed the softness to reduced visit frequency, increased promotional intensity across the apparel space and signs of consumer trade-down behavior amid a value-seeking environment.
The impact is visible in margin pressure, as higher markdowns and tariff-related costs weighed on profitability. While lululemon continues to attract guests, slower engagement from its core U.S. customer base has tempered near-term growth expectations.
Management is executing a three-pillar action plan focused on refreshing product assortments, elevating in-store and digital experiences and improving enterprise efficiency, with benefits expected to materialize in fiscal 2026. Coupled with robust international momentum, especially in China, lululemon’s premium positioning appears durable, though the U.S. recovery remains the key swing factor for sustained growth.
Peers Under Pressure: RL & UAA Navigate Weak Traffic Trends Too?
lululemon is not alone in facing softness in U.S. retail traffic. Its peers, such as Ralph Lauren Corporation (RL - Free Report) and Under Armour Inc. (UAA - Free Report) , with premium-oriented apparel, are grappling with similar headwinds, though with different strategic responses.
Ralph Lauren is navigating weak traffic trends by leaning into brand elevation and disciplined execution. In second-quarter fiscal 2026, management highlighted continued focus on full-price selling, higher average unit retail and reduced promotions, helping offset softer store traffic. Strength in international markets and digital channels further supported the results, while tighter inventory control and selective pricing actions preserved margins despite a cautious consumer backdrop.
Under Armour is responding to weak traffic trends by accelerating its multi-year reset focused on simplifying the business and sharpening brand positioning. In second-quarter fiscal 2026, management emphasized reduced promotional dependence, tighter inventory controls and SKU rationalization to improve sell-through amid softer U.S. demand. The company is also shifting toward premium performance products and a more balanced DTC-wholesale mix, while prioritizing profitability over near-term traffic recovery.
LULU’s Price Performance, Valuation & Estimates
Shares of lululemon have gained 9.4% in the past three months compared with the industry’s growth of 6.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 15.1X compared with the industry’s average of 16.3X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LULU’s fiscal 2025 and fiscal 2026 earnings implies a year-over-year decline of 10.8% and 2.3%, respectively. The company’s EPS estimate for fiscal 2025 has been northbound in the past seven days, while the estimate for fiscal 2026 has been southbound in the same period.
Image Source: Zacks Investment Research
lululemon currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.