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In the global apparel landscape, lululemon athletica inc. LULU and Guess? Inc. GES occupy sharply different yet increasingly competitive positions. LULU commands a premium share in the fast-growing athleisure space, built on innovation, community-driven branding and direct-to-consumer dominance. GES, in contrast, is a heritage lifestyle brand with a broad international footprint and a heavier reliance on wholesale and licensing.
As consumer spending patterns shift and competition intensifies, this face-off examines how each company’s market share, brand positioning and business model shape their ability to capture demand and deliver sustainable growth.
lululemon continues to command a differentiated position within the global apparel industry, particularly in premium athletic and lifestyle wear. While overall apparel remains highly fragmented, lululemon has carved out a meaningful share in the premium athleisure category through strong brand equity and pricing power.
In the third quarter of fiscal 2025, the company delivered 7% revenue growth, with international revenues rising 33% and China Mainland up 46% in constant currency, highlighting expanding global relevance. The brand’s core consumer remains affluent, wellness-focused and digitally engaged, supporting consistent traffic and repeat purchases even amid macro uncertainty.
lululemon’s “Power of Three x2” plan anchors the long-term investment case. The company is focused on doubling men’s, digital and international revenues by 2026, supported by sharper product innovation and category expansion. Management emphasized increasing new-style penetration to 35% by spring 2026, refreshing key franchises such as Scuba and Swiftly, and expanding adjacent categories like footwear and accessories to broaden wallet share. Digital remains central, with strong online engagement, localized storytelling and an integrated omni-channel model enhancing brand connection and conversion across regions.
Despite its premium positioning, lululemon is not immune to rising trade and tariff pressures, which remain a key risk to the investment case. Management acknowledged that higher tariffs and supply-chain-related cost inflation weighed on the gross margin in the fiscal third quarter, contributing to year-over-year margin compression.
While the company is pursuing mitigation actions through pricing discipline, vendor negotiations and operational efficiencies, the ability to fully offset these costs is limited in a more value-conscious consumer environment. Prolonged or escalating tariff headwinds could constrain margin recovery and temper earnings leverage, particularly if promotional activity intensifies across the broader apparel sector.
Guess occupies a distinct niche in the global apparel market as a lifestyle fashion brand with a strong international orientation. While its overall share of the highly fragmented global apparel industry remains modest, GES commands a meaningful presence in categories such as denim, handbags and fashion basics, particularly across Europe and Asia.
In third-quarter fiscal 2026, management highlighted that Europe continued to account for the largest share of revenues, benefiting from brand resonance, tourist demand and disciplined pricing, while Asia showed steady recovery trends. This geographic mix positions Guess differently from U.S.-centric peers and provides diversification across consumer cycles.
From a strategic standpoint, Guess is focused on brand elevation, portfolio optimization and profitability over pure volume growth. The company is sharpening its product assortment around core denim, dresses and accessories, while leveraging licensing to extend the brand into categories such as eyewear, fragrances and watches.
Management emphasized ongoing investments in digital platforms, omni-channel capabilities and data-driven merchandising to better target younger, fashion-conscious consumers globally. These initiatives aim to modernize the brand, improve speed-to-market and enhance full-price sell-through across regions.
Guess is prioritizing margin expansion and cash generation. In third-quarter fiscal 2026, the company delivered an improved gross margin, driven by lower promotions, better inventory discipline and a favorable channel mix, even as revenues reflected macro and geopolitical pressures. With a diversified brand portfolio, strong European positioning and a growing digital contribution, Guess offers an investment case centered on international scale, brand-led profitability and gradual market-share gains within the global lifestyle apparel space.
The Zacks Consensus Estimate for Guess's fiscal 2026 sales implies year-over-year growth of 8%, while the EPS estimate suggests a decline of 13.8%. The EPS estimate has moved up 5.6% in the past 30 days.
The Zacks Consensus Estimate for lululemon’s fiscal 2025 sales suggests year-over-year growth of 4.5%, while that for EPS indicates a decline of 11%. The EPS estimate has moved up 0.9% in the past seven days.
The latest estimates for Guess and lululemon suggest that while both companies are poised for growth, Guess may hold a near-term edge.
In the past six months, the Guess stock has edged in terms of performance, recording a total return of 47.4%. This has noticeably outpaced lululemon’s decline of 9% and the benchmark S&P 500’s return of 16.3%.
From a valuation perspective, lululemon trades at a forward price-to-earnings (P/E) multiple of 15.97X, which is below its 3-year median of 37.04X. Moreover, the lululemon stock trades above Guess’s forward 12-month P/E multiple of 9.7X and a 5-year median of 7.13X.
From a valuation lens, lululemon appears overvalued, as its premium pricing leaves limited room for error amid slowing growth and margin pressures. In contrast, Guess offers a more compelling setup, with its lower valuation better aligned to current fundamentals. Improving margins, disciplined cost control and steady international performance support a more favorable risk-reward profile for GES, particularly for value-focused investors seeking upside from execution gains.
Guess emerges as the more compelling choice for investors at this juncture, in the LULU vs GES face-off. While lululemon continues to dominate the premium athleisure segment with strong brand loyalty and global expansion plans, its lofty valuation and margin pressures present notable headwinds. In contrast, Guess combines a more attractive valuation with steady international growth, disciplined cost management and a clear focus on brand-led profitability.
Moreover, recent estimate revisions for Guess signal growing investor confidence in its earnings potential, reflecting optimism around the company’s execution and growth prospects. Supported by a strong six-month stock performance, a diversified global footprint, and investments in digital and omni-channel capabilities, Guess appears better-positioned to capture upside while managing risks in a dynamic apparel market.
lululemon currently carries a Zacks Rank #3 (Hold), whereas Guess has a Zacks Rank #2 (Buy). 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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