Lululemon Athletica (LULU) Stock Forecast & Price Target

Lululemon Athletica's forecasted total sales of $2.496 billion represent a 4.2% year-over-year increase, with comparable sales in key regions showing robust growth of 24% year-over-year, reflecting a strong demand for its products. International sales surged by 33% year-over-year, particularly driven by significant growth in China and other international markets, positioning the brand favorably on a global scale. Despite a contraction of 290 basis points in gross margin to 55.6%, Lululemon's performance exceeded expectations as both sales and margin metrics remained better than consensus estimates, indicating resilience and operating efficiency in a competitive retail environment.

Lululemon Athletica faces significant financial pressures, with expectations of gross margin contraction of approximately 580 basis points year-over-year, primarily driven by increased tariffs and fixed cost deleverage. Operating margins are projected to decline by 390 basis points for the year, a marked deterioration from earlier guidance, which anticipated a decrease of only 160 basis points. Furthermore, management forecasts continued operating margin declines into 2026 as the impact of tariffs persists and the company invests in compensation, indicating a challenging outlook for profitability.