Needham Downgrades Lululemon Athletica Inc. (LULU) to Hold

Lululemon Athletica Inc. (NASDAQ:LULU) is one of the 12 Best Widow and Orphan Stocks to Buy According to Analysts.

On September 25, Needham downgraded Lululemon Athletica Inc. (NASDAQ:LULU) to Hold, warning that growing challenges were offsetting its strong brand and 59.1% gross margins. After remaining unchanged in Q4 2024, North American comparable sales dropped 1% and 3% in the first two quarters of 2025, respectively, due to declining demand and unexpected tariff exposure on U.S. e-commerce orders.

In contrast to Wall Street’s flat growth prediction, Needham now projects mid-single-digit earnings declines for FY2026, citing a more competitive environment from non-athletic apparel companies such as Alo, Vuori, Fabletics, and Athleta. Younger consumers have also shifted away from Lululemon Athletica Inc. (NASDAQ:LULU)’s primary leggings category due to the denim trend, while the company’s casual collection has started to weaken. The brokerage stated that after years of rapid expansion, the climate remains “too challenging” for a lasting recovery, though new product releases might provide some support in 2025.

Under the Lululemon brand, Lululemon Athletica Inc. (NASDAQ:LULU) designs, markets, and sells technical sportswear, accessories, and footwear for men and women in North America and beyond. It is one of the Best Widow and Orphan Stocks.

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Disclosure: None.