Is lululemon's Digital Push Enough to Sustain Global Momentum?

lululemon athletica inc.’s LULU latest earnings call underscores a brand leaning heavily on digital strength as it navigates a shifting global landscape. The company’s digital ecosystem, anchored by its rapidly growing membership community of nearly 30 million members, remains central to deepening guest engagement and elevating personalization. With the appointment of its first Chief AI & Technology Officer, lululemon is doubling down on technology to accelerate product innovation, improve speed to market and enhance targeted consumer experiences across channels. This digital investment is paying off in the near term. 

In second-quarter fiscal 2025, digital revenues improved 9% year over year, contributing $1 billion, or 39% of total revenues. While store traffic softened, e-commerce conversion improved, aided in part by higher markdown activity and stronger engagement from new and mid-value guest cohorts. International markets also benefited from digital traction, helping offset sluggish trends in the United States and Canada. However, external pressures such as rising tariffs and the removal of the de minimis exemption have increased costs across online fulfillment, clouding the near-term margin outlook.

Looking ahead, lululemon aims to use digital capabilities to fuel a broader product reset. AI-enabled design processes, improved agility with vendor partners and faster chase capabilities are expected to strengthen innovation cycles and expand newness penetration from 23% to 35% by Spring 2026. Combined with an expanding global footprint and strong brand health, the company believes its tech-driven strategy will support long-term growth.

Still, questions remain: can digital momentum and enhanced personalization meaningfully counterbalance U.S. softness and margin pressure in the near term? 2026 may hold the answer.

LULU’s Competitors - Is the Digital Play Working for RL and CROX?

As lululemon doubles down on digital, its rivals Ralph Lauren Corp. RL and Crocs Inc. CROX are proving that a smart online play can be just as powerful in shaping brand momentum.

Ralph Lauren’s digital push is gaining traction. The company delivered double-digit digital growth across regions, boosted by stronger DTC traffic and the launch of its AI-powered “Ask Ralph” styling tool. With expanding social commerce in China and upgraded e-commerce capabilities in Japan, RL’s digital ecosystem is strengthening, yet maintaining this pace will require continued tech investment and deeper customer engagement.

Crocs’ digital push is showing mixed but promising momentum, as the company strategically pulled back on discounting across North American digital channels to protect brand health while leaning on strong digital marketplace performance. International DTC surged 23% y/y, driven by broad-based digital strength. Looking ahead, Crocs is doubling down on disruptive digital engagement and TikTok-led activations to fuel demand and sustain global growth.

The Zacks Rundown for LULU

lululemon’s shares have lost 56% year to date compared with the industry’s decline of 18.8%.

From a valuation standpoint, LULU trades at a forward price-to-earnings ratio of 12.96X, lower than the industry’s 15.79X.

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 earnings suggests growth of 0.7%. Earnings estimates for fiscal 2025 have been southbound in the past seven days. LULU currently carries a Zacks Rank #3 (Hold).

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

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