Is International Growth Enough to Keep lululemon Stock in Motion?

lululemon athletica inc.’s LULU international expansion is a critical lever for its long-term success. The company aims to unlock greater potential in its International segment by emphasizing product innovation and operational efficiency across key global markets, particularly in Mainland China.

lululemon continues to deliver solid momentum in its international markets, led by strong performance in Mainland China and the Rest of the World, reflecting the brand’s deepening global connection with consumers. It is also benefiting from smooth progress on its Power of Three X2 growth strategy. According to this plan, LULU looks to quadruple its international net revenues relative to 2021. The company is strictly focused on expansion in China and European markets. Under its Power of Three x2 strategy, lululemon aims to reach 200 stores in China.

In second-quarter fiscal 2025, the company’s total international revenues increased 22% year over year and 20% in constant currency, reflecting the brand’s accelerating global momentum and untapped market potential. Revenue in Mainland China, the company’s second-largest market, rose 25% (24% in constant-currency), supported by new store openings and robust brand activations. Meanwhile, the Rest of World segment grew 19% (15% in constant-currency), fueled by new market entries in Italy, Turkey, and Belgium. International comparable sales increased 15% and 13% in constant currency. Comps improved 16% in Mainland China and 9% in the Rest of the World in the fiscal second quarter. 

lululemon is preparing to launch in India through a franchise partnership in the second half of fiscal 2026, further bolstering its global footprint. The company continues to gain brand awareness and market share internationally, with a loyal and growing guest base. The company also expects the momentum in the international business to continue. Internationally, revenues are expected to increase 20-25% in Mainland China and 20% in the Rest of the World for fiscal 2025.

International expansion remains a promising pathway for LULU to diversify revenue streams, reduce dependence on U.S. performance and unlock higher growth margins. This, coupled with its expansion in localization and digitization, along with effective strategic execution, ongoing innovation and a disciplined approach, could be instrumental in driving overall top-line growth and enhancing shareholder value.

LULU’s International Peers

NIKE, Inc. NKE and adidas AG ADDYY are the key companies competing with lululemon across the international markets.

NIKE has a solid presence in the international markets, which is central to its growth strategy. The company has strategically invested in China to reinforce its consumer engagement and gain competitive leverage. NIKE’s EMEA and APLA businesses are showing encouraging progress, underscoring the benefits of the company’s strategic reset, amid a mixed global environment. In EMEA, revenues grew 6% year over year on a reported basis and 1% on a currency-neutral basis in first-quarter fiscal 2026, supported by healthy momentum in running, football and training categories. In APLA, revenues increased 2% year over year on a reported basis and 1% on a currency-neutral basis.

adidas is another sporting goods giant striving to capture a larger share of the international market. ADDYY is actively expanding its global presence by introducing locally relevant product lines and strengthening its brand equity through strategic collaborations and targeted marketing campaigns. adidas has been diversifying its supply chain and implementing risk-mitigation strategies. Initiatives such as the “Future City Concept” stores underscore the company’s continued commitment to advancing its retail strategy and enhancing consumer engagement.

LULU’s Price Performance, Valuation and Estimates

Shares of lululemon have lost 55.5% year to date against the industry’s decline of 19.4%.

From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 13.09X compared with the industry’s average of 15.71X.

The Zacks Consensus Estimate for LULU’s fiscal 2025 earnings implies a year-over-year drop of 11.8% while that of fiscal 2026 shows growth of 1.1%, respectively. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has moved up in the past 30 days.

lululemon stock currently carries a Zacks Rank #3 (Hold). 

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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