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LULU Stock: Why a Strong Comeback May be Underway
Posted On Dec 12, 2025 by Chris Markoch
Lululemon Athletica (NASDAQ: LULU) gave investors what they wanted to see, and they responded in kind. LULU stock surged over 12% in after-hours trading after the company beat on the top and bottom lines.
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The next 24 to 48 hours will be critical as investors see if LULU stock can hold onto those gains. Lululemon's latest quarter landed in that tricky middle ground where the headline numbers looked solid, but they weren’t the spectacular numbers the company had delivered in its heyday.
That means investors may still be wrestling with what the next leg of growth will look like. The stock has been under pressure for much of the past year as the market digested slowing growth in North America, rising competition in premium athleticwear, and concerns that pandemic-era demand had already peaked.
At the same time, Lululemon continues to post healthy double-digit growth in key international markets and on its digital channel, suggesting the brand still has room to grow outside its more mature U.S. footprint. Nevertheless, the new earnings report reinforced that message: revenue grew, comparable sales edged higher, and the company again showed that product innovation and category expansion can offset softness elsewhere.
However, there is emerging evidence that Lululemon's self-help plan is gaining traction. Management has been explicit that 2025 would be a transition year as the company works through inventory, sharpens merchandising in North America, and leans harder into international scale. The latest results indicate this work is starting to show up in the numbers, especially in China, APAC, and EMEA, even as the Americas remain a drag.
Investors are also considering the pending CEO transition and an increasingly constructive technical picture in the stock. The bottom line is that there may be a plausible turnaround setup: fundamental stabilization, a leadership catalyst, and a chart that looks far better than it did a few months ago.
What Did the Earnings Report Show?
For the third quarter of fiscal 2025, Lululemon generated revenue of about 2.6 billion dollars, an increase of 7% year over year. Diluted earnings per share came in at 2.59 dollars, down 10% from the prior year, reflecting higher expenses and investment despite the top-line growth.
Total comparable sales grew 2% in constant currency, with results driven by a 13% increase in digital revenue while store revenue was essentially flat. By category, women's apparel revenue rose 6%, men's grew 8%, and accessories and other revenue jumped 12%, supported by strength in outerwear, run, and train.
Regionally, revenue in the Americas declined 2%, while international revenue surged 33%. This continues to underscore the importance of Lululemon’s international expansion strategy.
A Shakeup in the C-Suite
Beyond the headline numbers, Lululemon announced that its current chief executive officer (CEO), Calvin McDonald, will step down effective Jan. 31, 2026. This adds another important layer to a potential comeback story.
McDonald has emphasized that the company is in the early stages of an action plan designed to reignite growth in the U.S. while maintaining momentum overseas. Investors will be keen to see whether the new leader stays the course or recalibrates priorities.
Leadership transitions at a brand-driven company like Lululemon are significant because they influence everything from product pipeline and merchandising discipline to how aggressively the company leans into new geographies and categories. A credible CEO with a clear plan can help restore market confidence that Lululemon can navigate competitive pressures and unlock the next phase of growth.
LULU Stock Has a Favorable Setup
On the chart, LULU stock has been carving out a constructive base after a prolonged downtrend. The stock has broken its falling pattern and is now trading back above its 50-period moving average on the 2-hour chart, with that moving average starting to slope upward around the 182 level, suggesting an improving intermediate trend.
Recent price action shows a series of higher lows since October, and the price is consolidating just below the mid-to-high 180s with potential resistance in the low 200s where the prior breakdown zone sits. The MACD has crossed above the zero line but remains relatively tame, indicating early positive momentum without entering an overextended condition.
For investors, the key levels to watch are support around the mid-170s and resistance near 200–206; sustained trading above the rising 50-period average would strengthen the case that a durable bottom is in place.
The Time May Be Right for LULU Stock
LULU stock closed at a price of $187.01 prior to its earnings report. That was 16.8% below the consensus price of $218.55. By itself, that would suggest positive sentiment for future growth. However, since the report, BTIG Research reiterated its Buy rating for LULU stock with a $303 price target. Bank of America raised its price target to $220 from $185.
Investors will want to see more bullish sentiment from analysts. However, for investors of all experience levels, the latest Lululemon earnings report paints a picture of a high-quality brand working through a mid-cycle slowdown rather than an ex-growth story. Solid revenue growth, improving international scale, a CEO transition, and a healing chart together offer a credible path to a turnaround, even if execution in the Americas and margin management remain critical watch items in the coming quarters.
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