Lululemon Stock's Price Troubles Continue After Earnings

lululemon signage seen outside of department store in New York City

(Image credit: Michael M. Santiago/Getty Images)

Lululemon Athletica (LULU) stock is trading lower Friday after the athleisure apparel company reported second-quarter results that were mixed compared with analysts' expectations and lowered its full-year outlook.

In the quarter ended July 28, Lululemon's revenue increased 7.3% year-over-year to $2.37 billion, driven by a 29% pop in international sales. Its earnings per share (EPS) were up 17.5% from the year-ago period to $3.15.

"In the second quarter, Lululemon delivered revenue and earnings growth, with ongoing strength across our international business," said Lululemon CEO Calvin McDonald in a statement. "In the U.S., our teams continue to optimize our product assortment and remain focused on driving forward our opportunities in the market."

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The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $2.41 billion and earnings of $2.93 per share, according to CNBC.

As a result of "uncertainties in the macro environment," as management mentioned in the earnings call, Lululemon slashed its full-year outlook. The company now anticipates revenue in the range of $10.375 billion to $10.475 billion and earnings per share of $13.95 to $14.15. It had previously forecast revenue to arrive between $10.7 billion to $10.8 billion and EPS of $14.27 to $14.47.

For the third quarter, Lululemon said it is guiding for revenue of $2.34 billion to $2.365 billion and earnings per share in the range of $2.68 to $2.73.

Is Lululemon stock a buy, sell or hold?

Lululemon Athletica has vastly underperformed the broad market in 2024, down 50% for the year to date vs the S&P 500's 18% gain. But Wall Street remains bullish on the consumer discretionary stock.

According to S&P Global Market Intelligence, the average analyst target price for LULU stock is $322.20, representing implied upside of more than 25% to current levels. Meanwhile, the consensus recommendation is a Buy.

Financial services firm Stifel is one of the more bullish outfits on LULU stock with a Buy rating and $370 price target.

"We see LULU uniquely positioned at the intersection of secular trends and believe international growth contribution is under-appreciated in shares," says Stifel analyst Jim Duffy. The analyst anticipates "multiple years of mid-teens plus revenue growth and margin expansion," which he believes will be complemented by stock buybacks.

"While [the] risk/reward assessment presumes ongoing strength, the bias remains to the upside, and we continue to view LULU shares as a solid core holding for growth investors," Duffy adds.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.