lululemon athletica inc. (LULU): A Bull Case Theory 

We came across a bullish thesis on lululemon athletica inc. on r/valueinvesting by _quantitative. In this article, we will summarize the bulls’ thesis on LULU. lululemon athletica inc.’s share was trading at $180.35 as of January 28th. LULU’s trailing and forward P/E were 12.96 and 14.39, respectively according to Yahoo Finance.

Lululemon Athletica, a premium apparel retailer, has seen its stock decline roughly 60% from its peak this year, largely driven by macroeconomic and idiosyncratic pressures. Slower U.S. sales, modest currency headwinds, and tariff-related supply chain concerns have led management to revise guidance, while consumer pushback on higher prices and rising competition in the athleisure space have compounded investor caution. Product innovation has also plateaued, with no major new fabric launches this year. Despite these near-term challenges, the company’s fundamentals remain compelling.

Lululemon is virtually debt-free, with a strong balance sheet, and has repurchased $1.77 billion of stock over the past year, positioning it to buy back more shares at current discounted prices. International expansion offers significant upside, with revenues in China up 25% and other markets growing 19%, while key regions such as India and parts of the Middle East remain untapped. The company’s brand moat is reinforced by high EBIT (~20%) and gross margins (~60%), proprietary fabrics, and a direct-to-consumer model that provides real-time insights into customer preferences.

The men’s segment, representing a third of sales, also offers room for growth. Strategic partnerships, including recent collaborations with Amex and fitness organizations, enhance brand visibility and customer engagement. Even with short-term headwinds, Lululemon generates robust free cash flow (~5.5% yield) and maintains a loyal customer base.

Current valuations, around 12x forward earnings, discount near-zero growth, presenting a compelling growth-at-a-reasonable-price opportunity. With share buybacks, international expansion, and continued brand strength, the market is likely underestimating Lululemon’s long-term upside potential.

Previously, we covered a bullish thesis on lululemon athletica inc. (LULU) by FeedbackAlarmed5045 in May 2025, which highlighted its strong brand moat, premium pricing, and international expansion. LULU’s stock price has depreciated by approximately 35.53% since our coverage due to macro pressures and consumer caution. quantitative shares a similar view but emphasizes near-term challenges, share buybacks, and untapped global growth as key upside drivers.

Lululemon athletica inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held LULU at the end of the third quarter which was 55 in the previous quarter. While we acknowledge the risk and potential of LULU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LULU and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.