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Can lululemon Restore Pricing Power Against Increasing Discounts?
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Key Takeaways
LULU saw weakened pricing power in 2025 as higher markdowns pressured its premium positioning.
LULU aims to restore full-price sales via reduced markdowns, tighter inventory and new product focus.
LULU expects pricing trends to stabilize by Q2 and improve in the second half.
lululemon athletica inc. (LULU - Free Report) has been taking steps to restore its pricing power; however, this will take time with disciplined execution. The pricing power weakened in 2025, reflected by higher markdowns. This suggests the company relied more heavily on discounts than it typically would, thereby weakening its premium brand positioning in the near term.
To offset this, the company has been restoring full-price sales, which remains a top priority. LULU’s strategy centers on reducing markdowns, tightening inventory and increasing product newness. The company expects full-price trends to stabilize around the second quarter and turn positive in the second half of fiscal 2026, with a structured recovery rather than an immediate rebound.
A key driver of this effort is product innovation and assortment refinement. The company is also reducing SKUs and curating a more focused assortment to enhance product visibility and desirability. This approach is crucial, as pricing power in the premium apparel segment is mainly owing to product differentiation, uniqueness and innovations.
Overall, lululemon’s ability to command premium pricing has been facing some temporary pressure. The company’s action plan, centered on innovation, disciplined inventory management and reduced markdowns, provides a clear pathway to restoring pricing strength. Success will ultimately hinge on sustained product appeal and the company’s ability to revive demand in its core North American market while preserving its premium brand image.
LULU’s Competition
NIKE, Inc. (NKE - Free Report) has been working to protect and rebuild its pricing power. NKE’s approach centers on reclaiming a premium brand position while balancing growth and profitability. A major pillar of NIKE’s pricing efforts has been reducing reliance on wholesale partners and strengthening its direct-to-consumer business. By selling more through its own stores and digital platforms, NIKE gains greater control over pricing, inventory and brand presentation. NKE has been focused on cleaning up inventory levels and tightening supply, enabling a gradual return to full-price selling. This strategy aligns with the broader industry trends, where premium brands emphasize long-term brand equity and pricing integrity over short-term volume growth driven by heavy discounting.
adidas AG (ADDYY - Free Report) is working to rebuild its pricing power. The company’s strategy is centered on restoring brand heat, tightening supply and reducing reliance on promotions. ADDYY is prioritizing product innovation and franchise strength to support premium pricing. By focusing on high-demand, culturally relevant products, adidas is strengthening perceived value and lessening its reliance on promotional activity.
LULU’s Price Performance, Valuation and Estimates
Shares of lululemon have lost 3.5% in the past six months compared with the industry’s rise of 0.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 12.97X compared with the industry’s average of 17.38X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LULU’s fiscal 2026 earnings implies a year-over-year drop of 6.9%, while that of fiscal 2027 shows growth of 8.9%. The company’s EPS estimate for fiscal 2026 and fiscal 2027 has moved down in the past 30 days.
Image Source: Zacks Investment Research
lululemon stock currently carries a Zacks Rank #3 (Hold).
View the Zacks #1 Rank List
Image: Bigstock
Can lululemon Restore Pricing Power Against Increasing Discounts?
Key Takeaways
lululemon athletica inc. (LULU - Free Report) has been taking steps to restore its pricing power; however, this will take time with disciplined execution. The pricing power weakened in 2025, reflected by higher markdowns. This suggests the company relied more heavily on discounts than it typically would, thereby weakening its premium brand positioning in the near term.
To offset this, the company has been restoring full-price sales, which remains a top priority. LULU’s strategy centers on reducing markdowns, tightening inventory and increasing product newness. The company expects full-price trends to stabilize around the second quarter and turn positive in the second half of fiscal 2026, with a structured recovery rather than an immediate rebound.
A key driver of this effort is product innovation and assortment refinement. The company is also reducing SKUs and curating a more focused assortment to enhance product visibility and desirability. This approach is crucial, as pricing power in the premium apparel segment is mainly owing to product differentiation, uniqueness and innovations.
Overall, lululemon’s ability to command premium pricing has been facing some temporary pressure. The company’s action plan, centered on innovation, disciplined inventory management and reduced markdowns, provides a clear pathway to restoring pricing strength. Success will ultimately hinge on sustained product appeal and the company’s ability to revive demand in its core North American market while preserving its premium brand image.
LULU’s Competition
NIKE, Inc. (NKE - Free Report) has been working to protect and rebuild its pricing power. NKE’s approach centers on reclaiming a premium brand position while balancing growth and profitability. A major pillar of NIKE’s pricing efforts has been reducing reliance on wholesale partners and strengthening its direct-to-consumer business. By selling more through its own stores and digital platforms, NIKE gains greater control over pricing, inventory and brand presentation. NKE has been focused on cleaning up inventory levels and tightening supply, enabling a gradual return to full-price selling. This strategy aligns with the broader industry trends, where premium brands emphasize long-term brand equity and pricing integrity over short-term volume growth driven by heavy discounting.
adidas AG (ADDYY - Free Report) is working to rebuild its pricing power. The company’s strategy is centered on restoring brand heat, tightening supply and reducing reliance on promotions. ADDYY is prioritizing product innovation and franchise strength to support premium pricing. By focusing on high-demand, culturally relevant products, adidas is strengthening perceived value and lessening its reliance on promotional activity.
LULU’s Price Performance, Valuation and Estimates
Shares of lululemon have lost 3.5% in the past six months compared with the industry’s rise of 0.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 12.97X compared with the industry’s average of 17.38X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LULU’s fiscal 2026 earnings implies a year-over-year drop of 6.9%, while that of fiscal 2027 shows growth of 8.9%. The company’s EPS estimate for fiscal 2026 and fiscal 2027 has moved down in the past 30 days.
Image Source: Zacks Investment Research
lululemon stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.