Has Lululemon lost its Mojo?

The tailwinds have long subsided and the headwinds are coming.

That’s the take from Citi analyst Paul Lejuez when it comes to Lululemon (Lululmeon Stock Quote, Chart, News, Analysts, Financials NASDAQ:LULU).

As reported by the Globe and Mail, Lejuez April 28 maintained his “Neutral” rating on LULU while cutting his price target from (US) $375.00 to $330.00.

“We rate shares of lululemon as a Neutral,” the analyst wrote. “After years of benefitting from outsized growth in active apparel, trends in the category have slowed in F24 with data in Yoga & Active apparel pointing to a further deceleration 2Q quarter-to-date vs 1Q (which was a big decel vs F23). This dynamic, coupled with LULU’s execution issues (lackluster product assortment/lack of color/sizing) leave LULU more susceptible to increased competition and promotional pressures in 2H24/F25. We believe category weakness and a tougher macro backdrop makes it unlikely LULU sees a reacceleration in U.S. trends in 2H. Additionally, while LULU has performed extremely well in China over several years, incremental weakening of the China consumer environment is an added risk to the stock (as expectations remain high on China growth).”

As for tariffs, Lejuez says the fact that LULU is actually Canadian might be cold comfort to investors.

“As a Canadian brand (though some consumers think of it as an American brand), LULU should feel less pain from a consumer backlash to American brands in key regions like China,” he said. “We estimate F25 China sales up 23 per cent (vs guidance 25-30 per cent and our prior estimate up 28 per cent). However, we believe it will be difficult for LULU to return to growth in the Americas in F25 given potential for a weakening consumer environment, particularly in 2H (we model comps down 4 per cent in 2H vs flat prior). We also note that given management’s previous comments about limiting reliance on price as a tariff mitigation tool, our GM estimate assumes very little pricing mitigation in F25 to offset higher tariffs.”