Lululemon athletica inc. (NASDAQ: LULU) is trading in the spotlight to start the holiday-shortened week, as investors weigh a rare convergence of catalysts: an activist hedge fund building a $1 billion-plus stake, a CEO transition that could reset strategy, and a fresh push to accelerate international growth in 2026. [1]
As of Dec. 22, 2025 (17:51 UTC), Lululemon shares were around $211, up roughly 0.8% on the day, after trading between about $208–$211.
That relatively calm tape masks a much bigger debate around the stock: whether Lululemon’s brand and product engine can regain momentum in North America—and whether the “reset” now forming in the boardroom can deliver a turnaround fast enough to justify renewed investor optimism.
What’s driving Lululemon stock on Dec. 22, 2025
1) A “CEO reset” narrative is taking hold
The most important company-specific development this month is leadership: CEO Calvin McDonald is set to step down effective Jan. 31, 2026, with Meghan Frank (CFO) and André Maestrini (Chief Commercial Officer) named interim co-CEOs while the board runs a comprehensive search with an executive search firm. Board chair Marti Morfitt is also becoming Executive Chair during the transition. [2]
The market initially responded positively when the change was announced alongside an earnings update, with Reuters reporting the stock jumped about 10% in extended trading on Dec. 11. [3]
2) Elliott Management’s $1B-plus stake raises both hopes and stakes
The second catalyst: Elliott Investment Management has built a stake exceeding $1 billion, according to Reuters, and has been linked to efforts to influence the leadership transition—reportedly aligning with retail executive Jane Nielsen as a potential CEO candidate. [4]
Activist involvement can be a double-edged sword. Bulls see urgency and accountability; bears see the risk of distraction, internal tension, or an expensive proxy fight. Reuters notes founder and major shareholder Chip Wilson has criticized the board and has pushed for a CEO search led by experienced, independent directors. [5]
A Wall Street Journal analysis published today frames the core question bluntly: does Lululemon need operational discipline, creative inspiration, or both, to revive the brand—and can the next CEO deliver that mix? [6]
3) New international expansion headlines land as North America cools
Adding to the news flow, Lululemon announced plans to enter six new markets in 2026—Greece, Austria, Poland, Hungary, Romania, and India—via franchise agreements and partnerships (Arion Retail Group in parts of Europe and Tata CLiQ in India). [7]
Retail Dive’s Dec. 22 coverage explicitly ties the move to a broader turnaround effort: growth outside the U.S. remains a bright spot, while North America is where Lululemon’s competitive and trend challenges have been most visible. [8]
The latest numbers: what Lululemon reported and guided
Fiscal Q3 2025: international strength, Americas weakness
In its fiscal third quarter (ended Nov. 2, 2025), Lululemon reported:
- Net revenue up 7% to $2.6 billion
- Americas net revenue down 2%
- International net revenue up 33%
- Comparable sales up 1% (or 2% on a constant-dollar basis)
- Diluted EPS of $2.59
- Gross margin 55.6%, down 290 bps year over year
- Operating margin 17.0%, down 350 bps
- Inventories up 11% to $2.0 billion (units +4%)
- 12 net new stores, ending with 796 locations [9]
The message is clear: international is carrying growth, while the Americas are dragging—a setup that makes the new 2026 market-entry plan feel less like optional upside and more like strategic necessity. [10]
Q4 and full-year outlook: revenue range and raised EPS guidance
Lululemon’s guidance (as of the Dec. 11 release) includes:
- Q4 2025 net revenue expected $3.500B–$3.585B
- Q4 diluted EPS expected $4.66–$4.76
- FY 2025 net revenue expected $10.962B–$11.047B
- FY 2025 diluted EPS expected $12.92–$13.02 [11]
One nuance investors are watching: fiscal 2024 had a 53rd week, while fiscal 2025 is a 52-week year, complicating year-over-year comparisons and making constant-week/constant-currency framing more important. [12]
Tariffs, promotions, and margins: the near-term risk investors can’t ignore
Tariff exposure is now a headline risk—again
Tariffs have moved from background noise to a front-and-center pressure point for consumer brands in 2025, and Lululemon has specifically flagged tariff impacts in both its guidance commentary and earlier reporting.
- In the Dec. 11 update, Lululemon said FY2025 guidance includes an estimated ~$210 million reduction in income from operations tied to tariff assumptions and the removal of the de minimis exemption (net of mitigation). [13]
- Reuters has also reported that the company expects a tariff-driven hit and reiterated an expected operating margin decline of ~390 bps (as discussed in coverage of the earnings/CEO announcement). [14]
- Earlier in the year, Reuters reported Lululemon cut forecasts and pointed to tariff and product issues, including an estimated $240 million impact on 2025 gross profit and a projected hit of around $320 million on operating margin in 2026. [15]
Macro uncertainty hasn’t disappeared heading into 2026 either. Reuters reported today that trade-policy uncertainty is likely to persist into next year, with the direction of U.S. tariff policy still a market-moving variable. [16]
Discounting and “product aging” remain part of the narrative
Beyond tariffs, the bigger operational story is product: executives have acknowledged product cycles ran too long in core categories, and the company has indicated it expects higher discounts as it clears older product lines. [17]
This matters to the stock because Lululemon’s premium valuation historically depended on premium brand heat. When discounts rise, investors immediately question whether the brand moat is narrowing—and whether margins can normalize without reigniting demand.
Stock buybacks and capital allocation: a lever management can pull now
Lululemon’s board approved a $1.0 billion increase to its share repurchase program on Dec. 3, leaving about $1.6 billion authorized as of Dec. 11. During Q3, the company repurchased 1.0 million shares for $189 million. [18]
Buybacks can support EPS and signal confidence—but they don’t solve the core problem if product-market fit is off. Investors will likely treat repurchases as supportive, not decisive, until evidence of U.S. re-acceleration appears.
Wall Street forecasts and analyst positioning: what’s the market betting on?
A divided Street: “turnaround potential” vs. “time and pain”
Recent analyst commentary has been mixed, reflecting two competing frameworks:
- Turnaround opportunity: leadership change + activist pressure + low expectations could create upside if product execution improves.
- Longer slog: competition is intensifying, and fixing brand momentum in the U.S. could take multiple seasons.
A Barron’s report on the Elliott stake noted some analysts turning more constructive on the potential for change, while also highlighting caution that the turnaround could be multi-year. [19]
Meanwhile, an Investing.com roundup of analyst notes around the Q3 update cited multiple price-target increases (including Evercore ISI lifting its target to $215 and maintaining an “In Line” stance), while still flagging deceleration and competition as ongoing headwinds. [20]
Valuation: “cheap for a premium brand”—or cheap for a reason?
A key piece of today’s debate is valuation framing. The Wall Street Journal argues the stock is trading at a low valuation despite healthy profit margins, creating an opening for a leadership-led reset—though the same piece questions whether discipline alone can re-ignite brand energy. [21]
Market data today shows LULU trading around 11x earnings (based on standard quoted P/E metrics), which is dramatically lower than the kind of multiples Lululemon commanded at its peak growth narrative.
Still, valuation compression rarely reverses sustainably without a clearer re-acceleration path in the Americas.
Lululemon’s competitive battlefield: why the U.S. is the key swing factor
Lululemon’s own numbers show the problem: in Q3, Americas revenue fell 2% and Americas comparable sales fell 5%, even as international growth remained robust. [22]
Competitively, the athleisure market is more crowded than at any point in Lululemon’s history—spanning premium challengers and mainstream brands that have improved design velocity and pricing flexibility. Reuters has explicitly highlighted market-share pressure from newer rivals and cheaper alternatives, alongside execution issues in core categories. [23]
That context explains why the next CEO decision is not merely symbolic. Investors want proof of:
- faster product development and cleaner assortments,
- fewer markdowns,
- improved women’s core bottoms performance (a recurring focus in analyst commentary), and
- a credible plan to protect margins in a tariff-heavy environment. [24]
A quick timeline: the key LULU stock headlines leading into Dec. 22
- Sep. 4, 2025: Reuters reports forecast cuts tied to tariffs and product issues. [25]
- Dec. 11, 2025: Lululemon posts fiscal Q3 results, raises FY EPS outlook, expands buyback authorization, and announces CEO succession plan. [26]
- Dec. 18, 2025: Reuters reports Elliott’s $1B+ stake and CEO-candidate discussions; Lululemon announces 2026 expansion into six new markets. [27]
- Dec. 22, 2025: Retail Dive highlights the 2026 expansion as international growth continues to outperform, while WSJ analysis frames the CEO choice as a critical inflection point. [28]
What to watch next for Lululemon stock
1) CEO selection and governance dynamics
The market is likely to re-rate the stock—up or down—based on (a) who is chosen, and (b) whether the process looks cohesive or contentious given activist and founder pressure. [29]
2) Holiday season read-through and Q4 margins
Management said it entered the holiday period encouraged by early performance, but also signaled higher discounting and ongoing promotional pressure—variables that can move gross margin meaningfully in retail. [30]
3) Tariff mitigation credibility
Investors will look for concrete mitigation progress—vendor savings, pricing actions, assortment optimization—because the company itself has embedded a sizable tariff impact in its outlook. [31]
4) International scaling: growth engine or complexity risk?
Expanding into six new markets is a bullish headline, but franchise partnerships also introduce execution risk (brand control, customer experience consistency, supply chain coordination). The market will watch early signals as 2026 approaches. [32]
The bottom line
As of Dec. 22, 2025, Lululemon stock sits at a crossroads: the company has real growth outside the U.S., a fresh capital return lever via buybacks, and now activist-driven urgency around leadership and strategy. [33]
But the bearish case is equally tangible: North American demand has softened, competition has intensified, tariffs and discounting are pressuring margins, and a CEO transition can either accelerate recovery—or prolong uncertainty. [34]
References
1. www.reuters.com, 2. corporate.lululemon.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.wsj.com, 7. corporate.lululemon.com, 8. www.retaildive.com, 9. corporate.lululemon.com, 10. corporate.lululemon.com, 11. corporate.lululemon.com, 12. corporate.lululemon.com, 13. corporate.lululemon.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.reuters.com, 18. corporate.lululemon.com, 19. www.barrons.com, 20. www.investing.com, 21. www.wsj.com, 22. corporate.lululemon.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. corporate.lululemon.com, 27. www.reuters.com, 28. www.retaildive.com, 29. www.reuters.com, 30. corporate.lululemon.com, 31. corporate.lululemon.com, 32. corporate.lululemon.com, 33. corporate.lululemon.com, 34. www.reuters.com
