Is Lululemon Back? What's Driving the Stock's Strong Gains This Month?

• Lululemon turned successful coagulated results, led by China and different planetary markets.

• More importantly, the company's beleaguered CEO volition measurement down, mounting the signifier for caller enactment to embark connected a turnaround.

• The banal is reasonably priced, but is inactive speculative astatine this time.

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Lululemon Athletica's (NASDAQ: LULU) banal has been a citrus for astir of 2025, but the banal has rallied implicit the past month. The biggest leap came aft the institution reported coagulated fiscal Q3 results and announced that it was looking for a caller CEO. Even aft its gains, the banal is inactive down astir 45% connected the year, arsenic of this writing.

Let's instrumentality a person look astatine the brand's results and prospects to spot if the banal tin proceed to rebound.

The past twelvemonth has been a hard 1 for Lululemon, arsenic the institution has doubly lowered its full-year guidance and its CEO has admitted mistakes, including letting merchandise lines get stale and not moving rapidly enough. This has led the company's laminitis and largest shareholder, Chip Wilson, to telephone for changes astatine the top. Wilson volition yet get his privation with existent CEO Calvin McDonald acceptable to measurement down astatine the extremity of January.

The alteration successful enactment volition travel astatine a clip erstwhile the athleisure apparel has go much competitive, with upstarts similar Alo and Vuori some making inroads. At the aforesaid time, determination has besides been a manner displacement toward looser and much varied silhouettes.

Turning to Lululemon's results, the 4th was mostly solid. Overall gross jumped 7% twelvemonth implicit twelvemonth to $2.57 billion, coming successful up of the $2.48 cardinal consensus. Adjusted net per stock (EPS) sank 11% to $2.59, but came successful solidly supra the $2.25 consensus.

Growth was erstwhile again powered by planetary markets. Its planetary gross jumped 33%, with comparable-store income climbing 18%. China helped pb the way, with income surging 47% to $465.4 million, and same-store income up 25%. Rest-of-world income roseate 19% to $367.2 million, arsenic comparable-store income accrued by 9%.

However, the retailer's North American operations proceed to struggle. Americas' gross fell 2% to $1.7 billion, portion same-store income dropped 5%. At the aforesaid time, the institution is facing aggravated borderline unit from tariffs.

Gross borderline decreased by 290 ground points to 55.6%, portion it forecast Q4 gross borderline to diminution by 580 ground points. It continues to effort and negociate with vendors to trim the impact.

Inventory levels, meanwhile, accrued by 11% twelvemonth implicit twelvemonth to $2 billion, and were up 4% connected a portion basis. Inventory is an important metric to ticker for struggling retailers and brands, due to the fact that large increases supra income maturation tin pb to much markdowns and sales. I wouldn't accidental inventory levels are a occupation yet.