Updated: Friday, Dec. 12, 2025
Lululemon athletica inc. (NASDAQ: LULU) just delivered one of its sharpest single-day rallies of the year, as investors reacted to a one-two punch: a better-than-expected fiscal Q3 report and a surprise CEO succession announcement. The stock’s powerful move has shifted the conversation from “what’s broken in North America?” to “is this the start of a reset?”—and sets up a potentially volatile week ahead for LULU shareholders. [1]
Lululemon stock this week: A Friday surge changes the tone
Lululemon shares closed at $204.97 on Friday, up 9.6% on the day, marking its strongest jump since April according to market coverage—an emphatic reversal after months of investor frustration around slowing U.S. momentum. [2]
Zooming out, LULU’s bounce is meaningful, but it’s also happening after a deep drawdown: the stock has been trading far below its $423.32 52‑week high and remains down sharply from early-2025 levels—one reason the CEO news was interpreted by some as a “reset” moment rather than a routine leadership transition. [3]
How the week actually unfolded (prices at close):
- Dec. 5: $190.01
- Dec. 12: $204.97 (weekly gain of about +7.9%, based on closing prices) [4]
- The biggest move came on Friday, following Thursday’s earnings release and CEO succession headlines. [5]
The headlines moving LULU stock right now
1) CEO succession plan: Calvin McDonald to step down Jan. 31, 2026
Lululemon said CEO Calvin McDonald will step down as CEO and board member effective Jan. 31, 2026, and will remain a senior advisor through March 31, 2026. The board has begun a comprehensive CEO search with an executive search firm. [6]
During the transition:
- Board chair Marti Morfitt becomes Executive Chair immediately.
- CFO Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs following McDonald’s transition. [7]
The company also highlighted that under McDonald’s tenure, annual revenue has more than tripled, and Lululemon expects to generate about $11 billion in annual revenue this fiscal year—context that helps explain why the exit surprised many observers. [8]
2) Founder Chip Wilson turns up the pressure
Founder and major shareholder Chip Wilson publicly criticized the board’s succession planning and pushed for a more product-led “back-to-basics” approach—adding a governance overhang that could continue to influence headlines. Reuters reported that Wilson has been vocal about the brand’s perceived drift and that a leadership change could take time to translate into measurable operating improvement. [9]
3) Fiscal Q3 earnings: International strength offsets U.S. softness
Lululemon’s fiscal Q3 (ended Nov. 2, 2025) results beat expectations on key lines, but the details show a company increasingly reliant on international growth to offset U.S. sluggishness:
- Total net revenue:$2.6B, up 7% year over year [10]
- Comparable sales: up 1% globally (up 2% on a constant-currency basis) [11]
- Americas: revenue -2%; comps -5% [12]
- International: revenue +33%; international comps +18% [13]
- China Mainland: revenue +46%; comps +24% (constant-currency comps +25%) [14]
This split—U.S. under pressure while China and broader international markets accelerate—is central to nearly every bullish and bearish thesis on LULU heading into 2026. [15]
Margin and inventory check: Where the “holiday pressure” shows up
The earnings report also made clear why investors are still cautious: profitability is being squeezed by a mix of costs and promotional dynamics.
Gross margin fell sharply
Lululemon reported gross margin of 55.6%, down 290 basis points year over year, with the company attributing pressure primarily to higher tariffs, markdowns, and credit-card affiliate program impacts (partly offset by pricing and lower product costs). [16]
Operating margin slid as well
Operating income was $435.9M, or 17.0% of net revenue, versus 20.5% a year earlier. [17]
Inventory rose heading into the holiday quarter
Inventory ended the quarter at $2.0B, up 11% year over year (units up 4%). That’s not automatically a red flag—especially for a retailer preparing for peak season—but in a promotional environment it becomes a key metric investors watch for signs of future markdown risk. [18]
Company forecast: Q4 and full-year outlook raised, but holiday revenue growth looks muted
One reason the stock popped is that Lululemon raised its full-year profit outlook—yet the company’s own Q4 revenue guide still points to a soft holiday growth profile.
Q4 fiscal 2025 guidance (holiday quarter)
- Net revenue:$3.500B to $3.585B, representing a decline of 3% to 1% (or +2% to +4% excluding the 53rd week in fiscal 2024) [19]
- Diluted EPS:$4.66 to $4.76 [20]
Full-year fiscal 2025 guidance
- Net revenue:$10.962B to $11.047B (about +4%, or +5% to +6% excluding the 53rd week) [21]
- Diluted EPS:$12.92 to $13.02 [22]
Tariffs and “de minimis” risk baked into guidance
Lululemon explicitly flagged a projected ~$210M reduction in income from operations (net of mitigation efforts), tied to assumptions about higher tariffs and the potential removal of the de minimis exemption for imports into the United States. This is a notable disclosure because it quantifies a policy-driven headwind that could materially affect margin and pricing strategy. [23]
Wall Street reaction and near-term LULU stock forecast signals
Analyst commentary immediately turned to two questions:
- Can Lululemon stabilize the U.S. business without destroying margins?
- Does a CEO search create a catalyst for a real strategy shift—or just uncertainty? [24]
Price targets moved higher after the report
Several firms raised targets while keeping cautious ratings:
- BofA Securities: raised price target to $220 from $185, maintained Neutral [25]
- Piper Sandler: raised to $190 from $165, maintained Neutral [26]
- Telsey Advisory Group: raised to $215 from $200, kept Market Perform [27]
A key takeaway: even the more constructive notes are often not “all-clear” calls. They generally reflect a belief that expectations had been reduced enough that “better than feared” results—plus buyback support—could justify a higher bar, while acknowledging that the U.S. turnaround may take time. [28]
Valuation snapshot: “cheap” relative to history, but not risk-free
Using the midpoint of Lululemon’s FY2025 EPS guidance (~$12.97) and Friday’s close ($204.97), LULU trades at roughly ~16x the company’s own FY2025 earnings outlook—one reason some analysts describe the setup as improved versus earlier in 2025. [29]
(That said, valuation alone rarely stops a stock from moving lower if U.S. demand weakens further or promotions intensify.)
Week-ahead outlook: 6 catalysts that could move Lululemon stock next week
Here are the most important factors to watch in the week ahead (starting Dec. 15):
1) Nasdaq-100 removal: potential index-flow volatility into Dec. 22
Late Friday, Nasdaq announced its annual Nasdaq-100 reconstitution: Lululemon (LULU) is among the companies set to be removed, effective before market open Monday, Dec. 22, 2025. [30]
Why it matters: changes like this can drive mechanical buying/selling from passive strategies and benchmark-aware funds. Nasdaq also noted the reconstitution is timed to coincide with the quarter’s quadruple witching expiration—often a period of elevated volume and volatility. [31]
2) Holiday demand and promotional intensity
Management’s Q4 revenue outlook implies the holiday quarter won’t be a “blowout” top-line story—so investors will focus on signals about:
- traffic trends,
- discounting,
- and whether product “newness” is improving sell-through. [32]
3) CEO-search narrative and governance headlines
The CEO search itself becomes a recurring headline generator: speculation about candidate profiles, interim decision-making, and any signs of board-shareholder conflict could move the stock even without new financial data. [33]
4) Inventory and margin watch
With inventory up year over year and gross margin down sharply, LULU’s stock is likely to stay sensitive to any channel checks or industry reports suggesting heavier markdowns across athleisure. [34]
5) Macro data: Retail sales prints next week (important for consumer discretionary sentiment)
The U.S. Census Bureau’s Advance Monthly Sales for Retail and Food Services (previously rescheduled) is due Dec. 16, 2025—a release that can swing sentiment across apparel and consumer discretionary names, especially into year-end positioning. [35]
6) Tariffs and “de minimis” policy risk stays front-and-center
Lululemon quantified tariff and import-policy impacts in its guidance, meaning investors will likely keep scanning for policy signals and company commentary about mitigation (vendor savings, pricing actions, sourcing changes). [36]
Practical levels traders are watching (no charts)
Even long-term investors often track major reference points after a large gap-up week:
- $213 area: Friday’s intraday high was about $213.22, a near-term “reaction high” that can act as resistance if momentum fades. [37]
- $187–$190 zone: Thursday’s close was $187.01 and the prior week closed near $190.01—levels that may matter if the stock pulls back and buyers look for support. [38]
Bottom line: Lululemon’s “reset trade” is real—but execution is the story
Lululemon stock ended the week with renewed momentum, powered by:
- a Q3 beat,
- raised full-year EPS guidance,
- a larger buyback authorization,
- and a CEO transition investors interpreted as a chance to refocus the brand. [39]
But the bull case still has to clear some very specific hurdles: reviving U.S. demand, rebuilding full-price selling, and navigating margin pressures tied to tariffs, promotions, and policy changes—all while a CEO search plays out in public view. [40]
References
1. www.barrons.com, 2. www.barrons.com, 3. www.barrons.com, 4. stockanalysis.com, 5. www.barrons.com, 6. corporate.lululemon.com, 7. corporate.lululemon.com, 8. corporate.lululemon.com, 9. www.reuters.com, 10. corporate.lululemon.com, 11. corporate.lululemon.com, 12. corporate.lululemon.com, 13. corporate.lululemon.com, 14. corporate.lululemon.com, 15. corporate.lululemon.com, 16. corporate.lululemon.com, 17. corporate.lululemon.com, 18. corporate.lululemon.com, 19. corporate.lululemon.com, 20. corporate.lululemon.com, 21. corporate.lululemon.com, 22. corporate.lululemon.com, 23. corporate.lululemon.com, 24. www.reuters.com, 25. www.investing.com, 26. www.investing.com, 27. www.tipranks.com, 28. www.investing.com, 29. corporate.lululemon.com, 30. www.nasdaq.com, 31. www.nasdaq.com, 32. corporate.lululemon.com, 33. corporate.lululemon.com, 34. corporate.lululemon.com, 35. www.census.gov, 36. corporate.lululemon.com, 37. stockanalysis.com, 38. stockanalysis.com, 39. corporate.lululemon.com, 40. corporate.lululemon.com
