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Quick Reference: LULU at a Glance

• Current price: ~$118 (as of early July 2026)
• 52-week range: $104.44 low / $249.97 high
• All-time high: $511.29 (December 2023) – stock is down roughly 77% from peak
• YTD decline: approx. 46% year-to-date in 2026
• Market cap: ~$14 billion
• P/E ratio: under 10x trailing earnings (deeply discounted vs. historical range)
• Analyst consensus (recent): overwhelming Hold, zero Buy ratings in latest Google Finance 3-month window; average 12-month price target ~$132
• Q1 FY2026 revenue: $2.47B, up 4% YoY – beat estimates by ~$60M
• Q1 EPS: $1.69 vs. $2.60 a year ago – down 35% YoY
• Q1 gross margin: 54.2% – down 410 basis points YoY
• Tariff impact Q1: 280 basis points gross negative hit on product margin
• Q2 guidance: revenue $2.45B–$2.475B (down 2–3% YoY); EPS $1.76–$1.81; operating margin ~11.6% vs. 20.7% a year ago
• Full-year 2026 revenue guidance: $11B–$11.15B (flat to down 1% vs. 2025)
• Full-year EPS guidance: $10.95–$11.15
• China revenue Q1: up 30% YoY – full-year guidance calls for ~20% growth
• North America full-year outlook: expected to decline high single digits
• New CEO: Heidi O’Neill (former Nike President) – starts September 8, 2026
• Elliott Management stake: over $1 billion, built December 2025
• Burry position: added shares in the low-to-mid $110s; LULU is his 2nd largest holding at Scion
• Next earnings: August 27, 2026 (after close)
• Key risk: new CEO kitchen-sink guidance reset, North America demand, tariff cost absorption
• Key catalyst: September 8 CEO transition; second-half margin improvement if tariff offsets hold

When recent analyst ratings show zero Buy recommendations on a stock, one of two things is true. Either everyone is right and the company is broken beyond repair. Or the consensus has overcorrected and the price already reflects a future that will not materialize.

Michael Burry thinks it’s the second one. He added to his Lululemon position when shares fell into the low-to-mid $110 range, calling the relative value in LULU superior to Microsoft at current prices. That’s not a throwaway line from a guy known for being precise.

The problems are real. That part is not in dispute.

Lululemon cut its full-year 2026 revenue and earnings guidance to flat to slightly negative growth, citing weaker North American demand, softer product launches, tariff and margin pressures, and a major product and brand reset as interim co-CEOs run the business ahead of incoming CEO Heidi O’Neill’s September 8 start. Management is accelerating product development cycles and pushing global expansion, while dealing with negative media coverage, a recently settled proxy fight with founder Chip Wilson, and a new consumer lawsuit alleging unlawful tariff-linked price increases filed in late June.

That is a lot of noise. The question is whether any of it is permanent.

The Numbers Behind the Collapse

The stock hit an all-time high of $511.29 in December 2023. It’s now trading around $118. That’s a drop of roughly 77% from peak. Year-to-date in 2026 alone, shares are down about 46%, touching an 8-year low of $104.44 in the process. The 52-week high was nearly $250. The market has priced in a lot of pain.

Q1 results told a complicated story. Revenue came in at $2.47 billion, up 4% year over year and about $60 million ahead of estimates. EPS of $1.69 met expectations. But operating income collapsed 37%, falling from $438.6 million to $276.9 million. Gross margin dropped 410 basis points to 54.2%. Tariffs alone hit product margin by 280 basis points in the quarter, partially offset by about 100 basis points from efficiency initiatives.

The Q2 guidance is where investors got spooked. Operating margin is expected to come in around 11.6% – versus 20.7% in Q2 last year. Revenue is guided for a 2–3% decline. That’s a dramatic compression in a single quarter, and it reflects a business absorbing tariffs, markdowns, brand headwinds, and a leadership transition all at once.

What Burry Is Actually Saying

Burry’s view is not that last quarter was good. His view is that the market is looking at a fundamentally strong brand as if it were broken. He pointed to the extreme bearishness of analyst coverage as a contrarian signal – the kind of one-sided pessimism he has historically found interesting. He also highlighted Lululemon’s tangible book value per share, which has roughly doubled to around $40 per share over the past three-plus years, and noted the company maintains high returns on equity and capital even in a difficult stretch.

He is not alone. Elliott Investment Management built a stake of over $1 billion in Lululemon in December 2025. Elliott does not build a billion-dollar position in a broken business. The firm originally pushed for a different CEO candidate, but the proxy fight with founder Chip Wilson has since been settled, with shareholders electing three management-backed directors including former Levi Strauss chief Chip Bergh. One major source of uncertainty is officially off the table.

Slight tangent, but worth noting: the company ended Q1 with $1.5 billion in cash and repurchased 2.2 million shares for $358.3 million during the quarter. There’s still $1 billion remaining on the buyback authorization. A company burning through capital at that pace is not one management thinks is headed lower.

Where the Bears Are Right

North America is soft. Not soft in a fixable-next-quarter way. Comparable sales fell 5% in the Americas during Q1 – that’s the fifth consecutive quarter of declines in the region. Full-year North America revenue is now expected to fall in the high single digits. The U.S. is slightly worse than Canada. Competition from Alo Yoga, Vuori, and others is real, and Nike’s new Skims partnership adds another credible competitor at the premium end.

The new CEO risk is also legitimate. When Heidi O’Neill takes over on September 8, she may choose to reset guidance conservatively before building from a cleaner base. That’s how many CEO transitions at challenged retailers work. It’s painful in the short term. The market tends to punish it even when it’s the right long-term move. Barclays has already flagged that O’Neill’s influence will likely be felt mostly in 2027, not 2026.

On top of all that, the company is now dealing with a fresh consumer lawsuit filed in late June alleging it kept tariff-linked price increases in place unlawfully. More headline risk, more legal distraction during what is already a complex operational period.

The China Number Nobody Is Talking About

China revenue grew 30% in Q1. Full-year guidance calls for roughly 20% growth in China Mainland. Rest of World – covering EMEA and Asia-Pacific outside China – grew 13% in Q1. Management guided for mid-teens growth internationally for the full year. These are not small numbers. The brand has genuine premium positioning in markets where it has not yet saturated. That’s a long runway, even if North America stays difficult through year-end.

The scale of China isn’t yet large enough to fully offset Americas weakness. But the growth rate suggests it’s moving in that direction faster than most analysts seem to be pricing in.

Three Scenarios from Here

Bull: O’Neill arrives September 8 and signals a credible product and brand reset. Tariff offsets hold – management has said they expect to offset nearly all tariff impact on a full-year basis. China continues compounding at 20%-plus. The stock re-rates from its current sub-10x trailing earnings back toward a more reasonable multiple as growth resumes in 2027.

Base: O’Neill conservatively resets guidance in the fall. North America stays soft through year-end. Q2 is the worst quarter for margins (management said Q2 will be the high-water mark for markdown pressure). The stock grinds sideways near current levels, with a 2027 recovery becoming the investable moment.

Bear: The CEO transition drags longer than expected. Product issues in North America persist into 2027. The consumer lawsuit adds unexpected costs and brand damage. Tariff offsets don’t materialize at the rate management projects. The stock tests or breaks below its 52-week low near $104.

The Valuation Question

At roughly 9-10x trailing earnings with over $1.5 billion in cash, the stock is priced like a melting business. Morningstar rates it a narrow-moat company with sales per square foot exceeding $1,400 and gross margins that historically run above 55%. That’s not the profile of a commodity retailer. It’s the profile of a quality brand going through a genuinely rough stretch.

Burry added when shares fell into the $110s. The stock is around $118 now. The next hard catalyst is August 27 earnings, followed by O’Neill’s September 8 start. Everything between now and then is mostly positioning and sentiment. The real question the stock forces investors to answer: is Lululemon structurally impaired, or is it a quality business at a cheap price during a temporary crisis? The answer completely changes the math.