Lululemon Athletica (LULU) Stock Forecast & Price Target

Lululemon Athletica is forecasted to achieve total sales of $2.496 billion, reflecting a year-over-year increase of 4.2%, driven significantly by a 24% growth in comparable sales in key regions. The company's strong international performance is underscored by a remarkable 33% increase in total international sales, particularly fueled by robust growth in China, where revenues surged by 46% year-over-year. Additionally, while gross margins experienced a contraction of 290 basis points, they outperformed consensus expectations, indicating a more resilient financial position, further supported by better-than-expected SG&A performance.

Lululemon Athletica is facing significant financial pressures, with expectations of a 390 basis point reduction in operating margins for the year, influenced mainly by higher tariffs, markdowns, and fixed cost deleverage. The company's gross margin is projected to contract approximately 580 basis points year-over-year for the upcoming quarter, exceeding prior consensus forecasts, due to increased tariffs and related costs from the removal of the de minimis exemption. Additionally, management anticipates continued operating margin declines into 2026, highlighting concerns over ongoing tariff impacts and the need for reinvestment in employee compensation.