Lululemon Athletica (LULU) Stock Forecast & Price Target

Lululemon Athletica is projected to achieve total sales of $2.496 billion, marking a 4.2% year-over-year increase, with the company's international sales demonstrating robust growth of 33% year-over-year, particularly driven by performance in China and other global markets. The gross margin, despite a contraction, performed better than consensus expectations, and selling, general, and administrative expenses also showed favorable outcomes relative to forecasts. Notably, the company's strategy to enhance product offerings through new styles and seasonal color releases has contributed to significant revenue increases, particularly in Mainland China, where sales rose by 46% year-over-year.

Lululemon Athletica is projected to experience significant operational challenges, with an expected decline of approximately 680 basis points in operating margins for the fourth quarter, primarily due to increased tariffs and the elimination of the de minimis exemption. The company also anticipates a year-over-year gross margin contraction of around 580 basis points, exacerbated by higher tariffs and the impact of fixed cost deleveraging, leading to an overall expected decrease in operating margins by 390 basis points for the year against earlier guidance of 160 basis points. Additionally, the company's projections for the fiscal year 2026 indicate continued margin pressure as tariff impacts roll into the next fiscal period, suggesting a persistent deterioration in profitability.