Despite going public all the way back in 2007, Lululemon is one of those pandemic stocks that felt like it came out of nowhere and suddenly shot up 50% for the year (you know, like the Zooms, Pelotons, and other things we pretended would matter forever). Everyone and their mom (plus half of LinkedIn) needed yoga pants and a ring light. But unlike Peloton… whose CEO lost a billion dollars and now sells $26,000 luxury rugs, Lululemon kept it clean. No lawsuits, no crazy boardroom exits, no tech cult vibes. While other pandemic stars were taken behind the barn and put out of their misery by the post pandemic market… Lululemon quietly stayed profitable and continued opening more stores.

But yesterday, Lululemon experienced what it’s like to find out for the first time that brands on Amazon are selling the same pants for $40 instead of $128. The stock plunged nearly 20% in a single day (its worst since the early pandemic chaos) and it’s now down 28% on the year. For a company with no debt, $1.3 billion in cash, and a cult following that treats Align leggings like holy relics, the selloff was aggressive. Let’s get into the numbers… because while they don’t always tell the whole story, they definitely kicked this one off. Q1 earnings came in at $2.60 per share on $2.37B in revenue. Solid. Beat expectations. But comparable sales has just 1% growth. Analysts wanted 4.1% (which is a big difference for a small number). Even worse, U.S. same-store sales declined 2%, and inventories spiked 23% to $1.7 billion. That’s a lot of unsold leggings, folks. But the bigger issue was that their Q2 and full-year outlooks got demolished.

Lulu now expects Q2 earnings of $2.85–$2.90 per share, way below the $3.31 Wall Street expected. Full-year EPS guidance was also hacked to a range of $14.58–$14.78 (previously as high as $15.15). And just like we saw with Broadcom’s earnings yesterday, that’s enough to spark a selloff.

CEO Calvin McDonald tried to stop the bears by blaming “tariffs” and a “dynamic macroenvironment.” But in reality, people aren’t buying $90 joggers like they used to and importing from Vietnam just got a hell of a lot more expensive. That said, Lululemon isn’t going into retreat mode. They’re pushing ahead overseas, where international sales are still growing, and launching new lines like “Glow Up” and “Daydrift” (which sound more like Spotify playlists than product drops). They even bought ad space on the Las Vegas Sphere… because if you're going to sell expensive pants in a tough market, might as well do it in the most expensive way possible.

But here’s the catch: 75% of Lululemon’s business is still tied to the Americas. And right now, their U.S. customer is acting like they found dupes that are “basically the same.”

UBS asked the billion-dollar question we’re all thinking: Is this slowdown just a blip, or something more fundamental? One analyst even said flat-out, “Sell shares now.” He probably took one look at the chart and thought “yeah this doesn’t need much more context, this is bad.” Others, like Oppenheimer and BofA, still think the drop is overdone.They believe Lulu’s still the fittest horse in the athleisure race… it just pulled a hamstring on the walk to the opening gates.

So while the selloff does seem overdone, investors are clearly worried that Lulu’s high-growth, high-margin era might be coming to an end. And if you’re wondering where I stand… I’m currently wearing a $40 Amazon pair that look and feel suspiciously similar to the real thing.

Stock.News has positions in Amazon.