Lululemon Athletica Inc. shares gained on Tuesday as investors awaited the company’s fourth quarter earnings release following the closing bell.
Wall Street analysts forecast earnings per share (EPS) of $4.79 on $3.58 billion in revenue. This projected performance represents a sharp sequential increase over the previous quarter’s $2.59 EPS and $2.60 billion in sales, even though year-over-year EPS is expected to decline by 22%.
The Lululemon stock currently trades at roughly 12x forward earnings — a valuation trough not seen in over ten years — after retreating to $159.91 from a 52-week peak of $348.50. Despite this significant pullback, the analyst consensus remains a “Hold,” with a mean price target of $205.88 suggesting a 29% potential upside. While earnings estimates have seen modest upward revisions over the last 60 days, revenue expectations have trended slightly lower.
At 1:57 p.m. EDT, Lululemon Athletica Inc. stock was trading at $162.32, higher by $2.40, or 1.48%.
CEO announcement?
Speculation is also mounting regarding a potential CEO appointment. Since Calvin McDonald’s departure in December, Lululemon has been without a permanent leader. Elliott Investment Management, holding a stake exceeding $1 billion, has reportedly floated former Ralph Lauren executive Jane Nielsen as a candidate.
Simultaneously, Founder Chip Wilson has intensified his pressure on the board, recently calling for the replacement of more than three directors and advocating for governance overhauls.
“While we have proposed changing three directors, our strong feeling is that more than three directors should be replaced,” Wilson said in a letter to shareholders.
This boardroom friction stems from Wilson’s public criticism of the current strategic path, particularly regarding marketing and creative leadership. Wilson, who holds a 4.27% stake, launched a proxy battle late last year by nominating three independent directors and proposing an annual election format. He has also expressed frustration over the board’s rejection of a dedicated brand and product oversight committee.
Operationally, the focus remains on North American demand. Analysts at UBS and elsewhere have flagged softening sales in the Americas, noting that growth in the region may struggle to stabilize through 2026.
Competitive threats are rising, with Alo Yoga claiming 14% of the premium athleisure market, alongside internal concerns over discounting and product quality. To counter this, Lululemon recently introduced “ShowZero,” a sweat-concealing fabric technology. Investors are keen to see if such innovations can revitalize demand and restore full-price selling momentum, following a third-quarter performance that comfortably beat both top and bottom-line estimates.
