Shares of Lululemon have been under pressure after the company’s market capitalization contracted from over $68.3 billion at its 2024 peak to roughly $23 billion today, representing a decline of more than 65%. Analysts at Woodrow Capital recently lowered their 12-month price target by 20%, citing decelerating same-store sales growth—up just 6% in the third quarter versus 18% a year earlier—and an unexpected 52% increase in inventory levels compared with the prior year. Management has trimmed full-year guidance for revenue growth from a range of 12%–14% to 8%–10%, while operating margin expectations were cut by 150 basis points. Investor sentiment has also been dampened by weaker traffic trends in key North American and European markets, where customer counts slipped by 4% quarter-over-quarter.

In response to more than 1,200 customer complaints regarding sheer fabric in its new Get Low workout line, Lululemon has halted online sales of the entire collection. The line debuted just two weeks ago with 15 SKUs, representing 3% of the company’s anticipated spring release revenue. According to internal quality-control data, 18% of inspected units failed the opacity standard. The recall and re-engineering process is expected to add approximately $12 million in incremental costs, including production re-runs and expedited shipping of replacement inventory. Lululemon’s Chief Product Officer stated that the company is strengthening its pre-launch fabric validation protocols and will roll out updated opacity thresholds across all digital rendering tools by the end of Q2.

The dual challenges of slowing top-line momentum and product-quality issues have prompted several institutional investors to reduce their exposure to Lululemon by an aggregate of 3.5% of outstanding shares in the past month. Consumer surveys conducted by Footwear Insights indicate that Lululemon’s brand favorability score slipped from 87% in January to 79% in March, with 42% of respondents citing concerns over inconsistent product quality. To bolster confidence, management has accelerated its store-level training on customer feedback capture and plans to introduce a dedicated mobile-app feature for real-time fit and fabric reviews. Key opinion leaders in the fitness community have been tapped for an ambassador program scheduled to launch in May.