Lululemon Athletica (LULU) Slid Amid Sales Slowdowns

Diamond Hill Capital, an investment management company, released its “Select Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets rebounded from a sharp downturn at the start of April following the President’s “Liberation Day” tariffs announcement. As measured by the Russell 3000 Index, US stocks rose approximately 11%. Large-cap stocks saw the highest increase this quarter, rising just over 11%, while small-cap and mid-cap stocks gained approximately 8.5% each. The portfolio delivered positive results in the quarter but trailed the Russell 3000 Index. The strategy returned 7.31% (net) vs 10.99% for the index. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its second-quarter 2025 investor letter, Diamond Hill Capital Select Strategy highlighted stocks such as Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories. The one-month return of Lululemon Athletica Inc. (NASDAQ:LULU) was -10.54%, and its shares lost 32.78% of their value over the last 52 weeks. On September 29, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $179.11 per share, with a market capitalization of $20.907 billion.

Diamond Hill Capital Select Strategy stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its second quarter 2025 investor letter:

"Other bottom contributors included Bank of America, Lululemon Athletica Inc. (NASDAQ:LULU) and CarMax. Athletic apparel retailer lululemon faced a softer quarter in the US and internationally as sales slowed. However, we believe the brand remains relevant and shares are trading at an attractive discount to our estimate of intrinsic value."

Lululemon athletica inc. (NASDAQ:LULU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 55 hedge fund portfolios held Lululemon athletica inc. (NASDAQ:LULU) at the end of the second quarter, up from 48 in the previous quarter.  While we acknowledge the potential of Lululemon athletica inc. (NASDAQ:LULU) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Lululemon athletica inc. (NASDAQ:LULU) and shared the list of best widow and orphan stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.