Lulu Stock Rises Premarket Ahead of Q1 Results as Analyst Sees Cheap Valuation but Warns of FY26 Reset Risk
Lululemon Athletica shares rose 0.4% in premarket trading on Thursday ahead of the company’s first-quarter earnings report, even as Wall Street turned more cautious on the stock’s near-term outlook. Evercore ISI cut its price target on LULU to $130 from $175 and kept an “In Line” rating, saying the possibility of a major reset to fiscal 2026 expectations could outweigh what it described as an attractive valuation.
The stock has fallen 4% this week and is on track to break a two-week winning streak. Over the past year, shares are down 62%, reflecting persistent concerns about slowing growth and the pace of the company’s turnaround.
Analysts surveyed by Koyfin expect Lululemon to report first-quarter revenue of $2.37 billion, slightly below the $2.4 billion posted a year earlier. Earnings before interest, taxes, depreciation and amortization are projected at $553 million, up from $438.6 million last year but well below the $946.8 million reported in the prior quarter. Earnings per share are expected to come in at $2.60, flat from a year ago and sharply lower than the $5.01 recorded in the previous quarter.
Investor attention will be focused on management’s guidance, especially whether the company updates its fiscal 2026 outlook after a difficult stretch for the brand. Lululemon has been working to restore full-price selling by introducing more new products, cutting markdowns and better managing inventory. Chief Financial Officer Meghan Frank said in March that the company is in the middle of restoring the “full-price health” of the brand.
The retailer also pointed to early momentum from newer product lines, including Unrestricted Power, ThermoZen and ShowZero. It expects positive full-price sales growth in North America to begin in the second quarter and continue through the second half of the year. Lululemon has said new products will make up 35% of its assortment in 2026, up from 23% in 2025, as it attempts to refresh its lineup and support demand.
International markets remain another key growth driver. Lululemon expects revenue in China Mainland to rise 20% this year, while the rest of its international business is projected to grow at a mid-teens pace. The company has cited strength in markets including China and South Korea and has also outlined expansion plans in additional franchise markets such as India.
Ahead of the earnings report, investors also welcomed the resolution of a long-running dispute with founder Chip Wilson. The company recently agreed to add two of Wilson’s nominees to its board and appoint a third director by Oct. 1, while Wilson agreed not to publicly criticize the company for 18 months. The settlement removes a distraction as Heidi O’Neill prepares to take over as CEO in September.
Retail sentiment on Stocktwits was neutral, with message volume described as high. Some users expressed optimism about new styles, lower markdowns and the potential for positive guidance revisions, though broader market expectations remain cautious heading into the results.
