Should you sell your Lululemon stock?

Citigroup analyst Paul Lejuez cut his price target on Lululemon Athletica (Lululemon Athletica Stock Quote, Chart, News, Analysts, Financials NASDAQ:LULU) to US$190 from US$220 and maintained a “Neutral” rating after the Vancouver-based athletic wear maker reduced its annual sales and profit outlook, sending its shares down almost 18% in premarket trading Friday, Sept. 5.

The Street average target is US$ 235.78, according to LSEG data.

Lululemon now expects fiscal 2025 earnings per share between US$12.77 and US$12.97, compared with prior guidance of US$14.58 to US$14.78. Second-quarter comparable sales rose 1% year-over-year, below consensus at 3%, weighed down by a 3% decline in the Americas. Management lowered full-year revenue guidance to 4%–6% growth, down from 7%–8% previously, citing continued softness in the Americas and moderately weaker growth in China.

“Management called out broader athletic apparel industry headwinds and weakness in casual/lounge (approximately 40% of sales) where they’ve mis-executed, driving higher markdowns in the second half,” Lejuez said. “While management’s proposed changes to fix the assortment make sense, that will be F26 at the earliest, and given recent underperformance, will likely be viewed skeptically.”

He also flagged tariffs as a major downside surprise, with an incremental 280 basis-point margin headwind expected in fiscal 2026 on top of 220bps in fiscal 2025. That implies EBIT margins in the mid-to-high teens, compared with 23.7% in fiscal 2024, and earnings of US$10–$11 per share in fiscal 2026, well below consensus at US$15.26.

As reported by the Globe and Mail, in his Sept. 5 report Lejuez cut his EPS estimates to US$12.92 for fiscal 2025 and US$10.45 for fiscal 2026, down from US$14.47 and US$14.40, respectively. He cited slowing activewear industry growth, execution missteps in product assortment and sizing, and rising competitive and promotional pressures in the U.S.

“We believe category weakness and a tougher macro backdrop makes it unlikely LULU sees a reacceleration in U.S. trends in the second half,” he said. “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.”

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