Is 2026 Shaping Up To Be A Lost Year For Lululemon In America
Lululemon Athletica shares are on track to end the year down roughly 45%, prompting Elliott Investment Management to reportedly build a $1 billion stake earlier this month and set the stage for a turnaround push early next year.
However, UBS analysts note that while Lululemon retains a solid global brand, the North American outlook, particularly in the US, remains materially weak.
A team of UBS analysts led by Jay Sole cites UBS Evidence Lab's latest global athleticwear survey, which suggests Lululemon's Americas growth rate will "remain lackluster" in 2026.
"The survey shows the Lululemon brand name remains very strong, but customer engagement metrics in the US are weak," Sole told clients on Wednesday.
Sole adds that any turnaround at Lululemon would likely require both new leadership and a multi-quarter restructuring effort to repair the struggling US business, a process that could take at least a year to implement:
LULU is likely to name a new CEO over the next few months. This decision likely has a bigger near-term impact on the stock than anything else. However, no matter who the new CEO is, we think LULU will have to invest at least a year’s worth of time and effort to return its US business to sustainably positive sales growth.
Why UBS expects Lululemon to struggle in North America next year:
-
A relatively high share of US consumers report their overall impression of Lululemon has worsened over the past year. Roughly 10% of US respondents said this, the highest negative reading among all brands surveyed.
-
US aided brand awareness declined year over year, falling to 41% from 45% last year and 42% in 2023. UBS views weakening aided awareness as a sign the brand is generating less consumer buzz, which could translate into lower store and website traffic and ultimately weaker sales.
-
Several key brand perception metrics weakened year over year, including views that Lululemon is good for everyday casual wear, suitable for sports or exercise, fashionable or cool, and prestigious.
-
US purchase intentions remain sluggish. While the score rose 6% year over year, it is flat on a two-year basis, indicating little momentum.
To read the full note, ZeroHedge Pro subscribers can find it in the usual place.
Meanwhile, activist veteran Paul Singer appears to view the drawdown on the stock as an opportunity.
The Wall Street Journal reported earlier this month that Singer built a roughly $1 billion position, a move that suggests corporate restructuring pressure could intensify heading into early 2026.
Tyler Durden
Fri, 01/02/2026 – 06:55