Lululemon shares have plunged more than 60% from their recent peak as investors reacted to slowing same-store sales growth in the U.S. and margin compression. Despite this downturn, several strategists argue that Lululemon could stage a quicker rebound than peers, citing its concentrated brand loyalty in the premium casual apparel segment. Historical rebounds following similar drawdowns have seen the stock recover 40% within 12–18 months, offering a blueprint for what might happen if traffic and sales metrics stabilize.

U.S. retail traffic trends have remained weak for Lululemon, with comparable store sales growth sliding into low single digits in the last quarter. Management highlighted that average unit retail prices have come under pressure as promotional activity increased to drive footfall, resulting in gross margin compression of nearly 120 basis points year-over-year. Operational expenses rose by 15% as the company invested in omnichannel fulfillment and staff incentives, squeezing operating margins into the mid-20% range for the period.

Outside North America, Lululemon reported 25% year-over-year revenue growth in key markets such as Greater China and Europe, driven by new store openings and localized product assortments. E-commerce sales overseas jumped 45%, accounting for 18% of total revenues compared to 12% a year earlier. This geographic diversification helped offset nearly half of the softness in U.S. revenues and underpins management’s target of 50–60 annual new store openings internationally through 2028.