Lululemon (LULU) Stock: Buy the Dip or Value Trap Before Tuesday’s Earnings?

TLDR

• LULU reports Q4 FY25 earnings on Tuesday, March 17, after market close.
• Analysts expect EPS of $4.78, down 22.2% year-over-year, and revenue of $3.57 billion, down 1.1%.
• The stock is down ~24% year-to-date and over 50% in the past 12 months.
• Wall Street holds a consensus Hold rating, with an average price target of $205.53 — about 30% above current levels.
• CEO Calvin McDonald is stepping down, with a replacement search ongoing.

Lululemon heads into Tuesday’s earnings report with its stock sitting near a multi-year low. LULU is down about 24% this year and has shed more than half its value over the past 12 months. The pressure is on.

Lululemon Athletica Inc., LULU

Analysts expect the company to post Q4 revenue of $3.57 billion, a 1.1% drop year-over-year. That’s a sharp reversal from the 12.7% growth it put up in the same quarter last year. EPS is forecast at $4.78, which would represent a 22.2% decline.

Earlier this year, management said Q4 results could come in near the high end of guidance, pointing to solid holiday demand, heavy store traffic, and strong seasonal promotions including Black Friday.

Peers in the apparel space have had a mixed earnings season. Tilly’s grew revenue 5.3% and beat estimates, jumping 46.4% post-results. Zumiez grew 4.4% but still fell 10.9% after its report. The sector overall is down about 9.7% over the last month.

LULU has missed Wall Street’s revenue estimates multiple times over the past two years. Analysts haven’t moved their estimates much in the last 30 days, suggesting they expect the company to hold steady rather than surprise.

Leadership in Flux

In January, CEO Calvin McDonald announced he would step down after leading the company since 2018. He’s expected to stay on as a senior advisor through March 31 while the search for a new CEO continues.

If a new chief executive is announced alongside the earnings, the market could react positively. A leadership change of that kind tends to reset investor expectations.

International Growth as a Bright Spot

North American store traffic has been slowing, and U.S. growth guidance has been cut. But Lululemon has been pushing hard into international markets — particularly China and Mexico — with new store openings designed to offset domestic softness.

That international strategy is one of the few clear growth levers available to the company right now.

On valuation, LULU currently trades at a forward P/E of about 12.1x, well below the sector average of around 16x. That gap suggests much of the recent bad news may already be priced in.

Macroeconomic headwinds remain a concern. Tariff uncertainty, inflation, and cautious consumer spending — especially among lower-income shoppers — could weigh on results. Competition in the athleisure market is also intensifying.

Wall Street’s consensus is a Hold, based on one Buy and 17 Hold ratings over the past three months. The average price target sits at $205.53, against a current price of around $158.

Lululemon reports after the close on Tuesday, March 17.

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