Lululemon Fell 17%. Is It Time to Buy?
Lululemon Athletica lost 17.38% in one session on September 4, closing at $100.61 after cutting its full-year earnings guidance the evening before. Volume hit 37.3 million shares against a recent average near 4.0 million, and the selling took out the prior 52-week low of $104.44 rather than pausing there. Lululemon stock now sits 80.3% below its all-time closing high of $511.29 from December 29, 2023, in a 52-week range of $97.99 to $225.98. All figures here are in US dollars, as the company reports.
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September 7 was Labour Day, so that close is still the last one on the tape, and thin pre-market trade near $100.30 on September 8 is not something to build a view on. We covered the results in our breakdown of the quarter itself. One local note: Lululemon is headquartered in Vancouver but files as a US domestic filer and reports in US dollars. Readers who want large-cap Canadian names, with steadier records than this one, can start with Canadian blue chip stocks.
The guidance cut was reported as 13%. Like for like it is about 21%
In lululemon’s second-quarter release on September 3, the company guided fiscal 2026 revenue to $10.350 billion to $10.500 billion, “representing a decline of 5% to 7%”, with diluted EPS of $9.48 to $9.73. The company’s June guidance called for revenue of $11.000 billion to $11.150 billion, “representing a decline of 1% to 0%”, and diluted EPS of $10.95 to $11.15. Midpoint to midpoint, $11.05 down to $9.605 is a cut of 13.1%.
That comparison is not like for like. The June release stated its guidance “does not reflect any potential IEEPA tariff refunds”. The September guide includes them: $0.86 of refunds and interest already recognised, with no further refunds assumed. Strip that $0.86 back out and the comparable midpoint is $8.745.
On the basis the June guide was struck, the company cut its own full-year earnings outlook by about 21% in three months, not 13%. Revenue guidance came down $650 million at both ends, about 5.9%, so earnings fell roughly three and a half times as fast as revenue.
Fiscal 2026 diluted EPS guidance, midpoint of the range. Guides from lululemon’s Q1 release of June 4, 2026 and Q2 release of September 3, 2026. Consensus from Yahoo Finance.
Every double-digit drop in this stock since 2024 kept falling
We measured what followed every single-day fall of 10% or worse in the full price history. The sample from the current downtrend contradicts the buy-the-dip case, so it goes first.
Since the start of 2024 there have been five such drops, September 4 included. Measured from the close on the drop day, the completed cases give a median 30-day return of -13.1%, positive in 1 of 5; -21.0% at 60 days, positive in 1 of 5; -34.8% at 90 days, positive in 1 of 5; and -26.9% at 180 days, positive in 1 of 4. Five observations is a small sample and we will not pretend otherwise. It is also the only sample drawn from the current regime: a death cross that has held since April 25, 2025, with the stock down 62.4% since.
The full history reads better. There have been 33 drops of 10% or worse since 2007, September 4 being the 33rd, and across the 32 completed cases the median return was -1.5% at 30 days (positive in 13 of 32), -10.9% at 60 days (14 of 32), +8.1% at 90 days (20 of 32) and +36.8% at 180 days (21 of 31). That last figure should not be quoted without its reason: 11 of the 33 drops fell in 2008 and 2009, so the biggest gains come from buying into the financial-crisis bottom. It flatters the record.
Eight straight beats have not saved it
Over the last eight quarters Lululemon has beaten consensus EPS eight times with no misses, at an average surprise of +13.1%. The average next-session move across those reports was -6.2%, positive in only 3 of 8. Thirty days later, -6.3%, positive in 3 of 7. Ninety days later, -18.0%, positive in 1 of 7.
The printed quarter has not been the problem, and beating it has not rescued the stock. The market has been repricing the business rather than the result, which is a clean illustration of what actually moves a share price: price follows expectations about the future, not the number a company just reported about the past.
Share price change from the last close before each report. Prices: Yahoo Finance.
Where the street landed
Across 26 analysts the mean price target is $110.75 and the median $105.50, against $127.35 and $121 on September 3, and the consensus rating is hold. The $280 high has not moved since the cut and is plainly stale, while the mean sits about 10% above the September 4 close and the median about 5%.
The revisions matter more. Over seven days, Q3 fiscal 2026 EPS consensus fell 59% to $1.03, Q4 fell to $4.04 from $5.07, and full-year fiscal 2026 fell to $9.92 from $10.98. Fiscal 2027 fell from $11.43 to $9.13, down 20.1%. Analysts cut next year harder than they cut this year, which is not the shape of a one-quarter reset, and fiscal 2027 revenue consensus of $10.52 billion is flat on fiscal 2026.
As reported in the financial press, JPMorgan’s Matthew Boss cut his target to $95 from $154 and maintained Neutral. UBS cut to $106 from $120, also Neutral, citing product assortment not resonating with consumers and weak traffic. Morgan Stanley cut to $83 from $93 and kept Underweight, expecting new management to adopt a “shrink to grow” strategy that drives another round of negative EPS revisions. Two of those three targets sit below the September 4 close.
The multiple looks low, and next year it is higher
On the guided full-year EPS midpoint of $9.605, the stock trades at 10.5 times the September 4 close, against 12.7 times at the September 3 close of $121.77.
The honest figure strips out the refund the company says will not repeat. On the ex-refund midpoint of $8.745 the stock trades at 11.5 times, and on fiscal 2027 consensus EPS of $9.13 it trades at 11.0 times. The multiple goes up next year, because consensus has earnings falling again. A low multiple on a falling earnings line is not value: the denominator is the part that is moving.
The bull case, fairly stated
Excluding the refund, the quarter still beat consensus, at roughly $2.06 against $1.79. International revenue rose 4%, up 2% in constant dollars, while the Americas fell 8%, so the brand is not struggling everywhere. The company holds $1.4 billion of cash with $593.7 million available on its revolver, and repurchased 2.7 million shares for $330.0 million in the quarter. Inventories were down 1% in dollars and 7% in units, so the margin problem is not a coming fire sale of excess stock. Incoming chief executive Heidi O’Neill starts the week of September 7, and the reset guide lands in her first days.
The bear case, fairly stated
Comparable sales fell 9% and Americas comps fell 12%. Excluding the refund, underlying gross margin fell roughly 360 basis points and underlying operating margin roughly 750 basis points; reported margins look better only because the refund added 560 basis points to both. SG&A rose to 41.7% of revenue from 37.7%, four points of deleverage. Q3 guidance implies revenue down 10% to 11%, and the full-year guide still leans on the $0.86 the company says will not repeat.
What would change the view
Americas comparable sales stabilising is the single number to watch, because it is the one driving the deleverage. Next, the incoming chief executive’s first strategic update, and whether it is a “shrink to grow” plan; one that trades revenue for margin would fit the Morgan Stanley framing and could bring more estimate cuts before fewer. Then whether the third quarter lands inside or below the guided range, in a report due in December.
Until one of those turns, the evidence points one way. The stock is cheaper, the ex-refund multiple of 11.5 times rises next year, and all five double-digit drops since 2024 kept going. Cheaper is not the same as cheap.
Buying US-listed stocks from Canada
Lululemon trades on the Nasdaq, so owning it from Canada takes an account with US market access. Questrade is one Canadian broker that provides it.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Data as of September 8, 2026. Company guidance, quarterly results, margins, cash, buybacks and the tariff refund from lululemon athletica’s first-quarter fiscal 2026 release of June 4, 2026 and second-quarter fiscal 2026 release of September 3, 2026, both filed as 8-K exhibits 99.1 on SEC EDGAR. Share prices, volume, the 52-week range, analyst price targets and consensus estimates from Yahoo Finance, pulled September 8, 2026, as of the September 4, 2026 close. The single-day drop study, the eight-quarter earnings reaction study and the moving-average history are our own calculations from Yahoo Finance daily bars. Analyst target changes at JPMorgan, UBS and Morgan Stanley are as reported in the financial press. All figures in US dollars.
