Can lululemon's Brand Power Outrun a Slowing Activewear Market?

lululemon athletica inc. LULU remains a formidable force in premium activewear, even as the broader market softens. In second-quarter fiscal 2025, the company reported earnings per share of $3.10, beating estimates, while revenues rose 6.5% year over year to $2.53 billion amid slowing U.S. demand. While international markets, especially China, continue to post double-digit gains, U.S. performance has stagnated due to weaker consumer spending and a saturated athleisure segment. Still, lululemon’s strong brand loyalty, with nearly 30 million members, underscores the company’s enduring consumer appeal.

lululemon’s challenge lies in balancing innovation with relevance. Core casual lines such as Scuba and Softstreme have become “too predictable,” prompting plans to refresh designs and increase new styles from 23% to 35% by spring 2026. The company’s new creative leadership aims to restore momentum by accelerating its design cycle, leveraging its “Science of Feel” innovation platform, and introducing new collections like Loungeful and BeCalm. These moves highlight lululemon’s intent to stay ahead of competitors in both performance and lifestyle apparel.

Despite near-term pressures from tariffs and higher costs, lululemon’s focus on innovation, agility and global expansion positions it for long-term resilience. The brand’s ability to command loyalty and consistently reinvent its offering may well enable it to outpace the slowdown and reaffirm its dominance in activewear’s evolving landscape. As the company strengthens its product pipeline and speeds up market responsiveness, it is laying the groundwork for a stronger rebound in 2026. Ultimately, lululemon’s blend of innovation, brand equity and global reach could ensure it remains the benchmark in the premium activewear industry.

LULU’s Rivals: NIKE & Under Armour’s Brand Strength

In the competitive athletic apparel and footwear market, NIKE Inc. NKE and Under Armour UAA are both powerful players striving to capture the attention of performance-driven consumers while adapting to shifting market dynamics.

NIKE continues to dominate the global athleticwear market with its unmatched brand recognition, innovation and digital strength. Despite softer consumer demand in certain markets, the company’s strategic focus on direct-to-consumer sales and digital engagement has helped maintain its leadership position. NIKE’s deep investment in technology-driven personalization and sustainability through initiatives like its Nike App ecosystem and circular design programs has reinforced its emotional connection with consumers.

Under Armour is working to regain its footing after years of inconsistent performance. The company’s recent focus on performance authenticity and core athletic wear has revitalized its brand identity, distancing it from overextension into fashion-oriented segments. Under Armour is emphasizing efficiency, inventory discipline and international expansion, especially in Europe and Asia, to drive steady growth. Its renewed product innovation, particularly in training and running categories, aims to reconnect with athletes seeking high-performance gear.

The Zacks Rundown for LULU

lululemon’s shares have plunged 54.7% year to date compared with the industry’s decline of 27.3%.

From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 13.32X, higher than the industry’s 11.68X.

The Zacks Consensus Estimate for lululemon’s fiscal 2025 earnings implies a year-over-year decline of 11.9%, whereas the consensus mark for fiscal 2026 suggests growth of 1.12%. Earnings estimates for fiscal 2025 and 2026 have moved downward in the past 30 days.

LULU currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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