Sad news to report: Lululemon has been diagnosed with a severe case of "becoming the new Under Armour."

Pour one out for Lululemon. Shares got pancaked 16% yesterday after management took a hacksaw to guidance, finally admitting the athleisure bubble isn’t bulletproof. Spoiler: Tariffs nuked its import loophole, Alo Yoga is out-clouting them on TikTok, and U.S. consumers are realizing $100 leggings don’t count as rent.

(Source: Giphy) 

In short, the numbers weren’t necessarily catastrophic on the surface… Q2 earnings came in at $3.10 a share, better than the $2.87 analysts expected, on revenue of $2.53 billion. But management nuked guidance: Q3 sales forecast at $2.47–$2.50 billion vs. Wall Street’s $2.56 billion hope, with EPS in the $2.18–$2.23 range when consensus wanted closer to $2.90. Full-year revenue was also cut to $10.85–$11 billion from as high as $11.3 billion, with EPS slashed to $12.77–$12.97, down from $14.78.

(Source: Bloomberg) 

Of course, CEO Calvin McDonald blamed “product execution” and “U.S. weakness,” presumably because people don’t want to sell a kidney for a hoodie anymore. Comparable sales were up just 1%, missing the 3% target. And while the pandemic once sent revenue soaring 140% in four years, that runway has ended. The stock is now down 44% year-to-date, kneecapping most of its pandemic-era gains. 

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To be fair though, the pandemic boom made Lululemon look untouchable. Back then, you could slap a logo on spandex and print money. But fast forward to today and the brand is trying to pivot out of its rut with a new strategy that includes less corporate sandbaggers (150 layoffs in June) and more sports marketing. Case in point: Frances Tiafoe at the U.S. Open, Max Homa on the PGA Tour, Lewis Hamilton on the F1 circuit… the idea is to reposition Lululemon as more Nike, less PTA yoga mom. But even with Hamilton in a $200 track jacket, investors see through the rebrand. And that’s the simple fact that Alo, Vuori, and every TikTok-fueled DTC clone are clawing away at Lululemon’s premium chokehold.

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Additionally, tariffs haven’t helped either. Losing the de minimis exemption  means costs are rising just as consumers are tightening wallets. Price hikes may patch the margin, but it’s a risky play when rivals are undercutting them with cooler designs and cheaper fits. Translation: you can’t charge what you charge when TikTok is flooded with copycats for half the price that still make your a$$ look good.

Which brings me to the bottom line of it all: Lululemon is still a $37 billion brand with global reach, but its core U.S. engine is tapping out, and investors don’t want to bankroll a Nike “wannabe”  era if the leggings business can’t deliver. The market punished the miss with a -16% dump, and unless Lulu finds a way to turn influencer athletes into actual revenue, the future doesn’t look quite as bright. 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.