Can Global Trade Policy Risks Reshape lululemon's Supply Chain?

Global trade policy risks are emerging as a meaningful strategic variable for lululemon athletica inc. LULU, as the company scales its international footprint. Rising tariffs, the removal of favorable trade provisions and growing geopolitical tensions are increasing cost volatility across global apparel supply chains. For a premium brand like lululemon, where product quality, speed to market and margin protection are critical, trade policy uncertainty is no longer a background risk but a factor that could actively influence sourcing decisions, pricing strategies and operational design.

In response, lululemon’s supply chain strategy is likely to become more diversified and resilient rather than purely cost-optimized. Increased tariffs on specific regions can accelerate supplier rebalancing across multiple countries, reducing reliance on any single manufacturing hub. At the same time, the company may place greater emphasis on vendor negotiations, regional sourcing and distribution center efficiency to offset trade-related cost pressures. Investments in agility, such as faster production cycles and improved inventory placement, can help lululemon absorb policy shocks while maintaining product availability and brand consistency across markets.

In the longer term, global trade risks could subtly reshape lululemon’s operating model toward greater regionalization. As international markets like China and other parts of Asia grow in importance, producing closer to end consumers may help mitigate cross-border friction and improve responsiveness to local demand trends. While trade policy headwinds may weigh on near-term margins, they also reinforce the strategic value of a flexible, data-driven supply chain, one that supports lululemon’s premium positioning while enabling sustainable global growth despite an increasingly complex trade environment.

LULU’s Rivals: NIKE & Under Armour’s Supply Chain Strategies

In the competitive athletic apparel and footwear market, NIKE Inc. NKE and Under Armour UAA are navigating global trade policy risks that are increasingly influencing their supply chain strategies and cost structures.

Global trade policy risks are increasingly shaping NIKE’s supply chain strategy as the company manages one of the most complex and geographically dispersed manufacturing networks in the athleticwear industry. Tariffs, shifting trade agreements and geopolitical tensions raise input costs and disrupt traditional sourcing patterns, particularly in key Asian manufacturing hubs. In response, NKE has been prioritizing supply chain diversification, deeper supplier partnerships and greater use of digital planning tools to improve visibility and flexibility. These efforts help NIKE rebalance production across regions, protect margins and ensure product flow even as trade rules evolve.

For Under Armour, global trade policy risks pose a more pronounced challenge given its smaller scale and narrower margin buffer compared to larger peers. Exposure to tariffs and policy changes can directly pressure costs and limit pricing flexibility in a competitive, promotion-heavy market. As a result, Under Armour’s supply chain strategy is likely to focus on simplifying its vendor base, improving sourcing efficiency and selectively shifting production to lower-risk regions. While these actions may constrain short-term flexibility, they are essential for building a more resilient supply chain that can withstand trade disruptions and support the company’s ongoing turnaround efforts.

The Zacks Rundown for LULU

lululemon’s shares have gained 22.6% in the past three months against the industry’s decline of 0.2%.

From a valuation standpoint, LULU trades at a forward 12-month price-to-earnings ratio of 16.58X, lower than the industry’s 16.14X.

The Zacks Consensus Estimate for lululemon’s fiscal 2025 and 2026 earnings implies year-over-year declines of 11% and 1.9%, respectively. Earnings estimates for fiscal 2025 have been northbound in the past 30 days, whereas the same for fiscal 2026 have been southbound in the same period.

LULU 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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