Lululemon Faces Tough Turnaround as Market Share Slips, BMO Warns

Lululemon Athletica Inc. faces a difficult and prolonged turnaround as the athleticwear maker loses market share to rivals and records worsening sales declines, according to BMO Capital Markets. The firm initiated coverage of Lululemon with an Underperform rating and set a $70 price target, implying roughly a 28% decline from Thursday’s closing price.

Analysts led by Kelly Crago said Lululemon’s weak quarterly results and reduced full-year outlook point to mounting challenges across key markets, including the Americas and China. Younger consumers are increasingly gravitating toward brands such as Alo and Vuori, while the broader athleisure category faces slowing demand. BMO expects Lululemon may need to cut prices or liquidate inventory to revive sales, putting further pressure on profit margins.

The bearish outlook adds to growing investor concerns, with Lululemon shares already down 53% this year and more than 80% below their December 2023 record high. New CEO Heidi O’Neill, a former Nike executive who began her tenure this week, now faces the task of restoring growth and rebuilding the brand’s image. BMO believes the stock could fall as low as $50, although Crago noted that the current negativity surrounding the athleticwear sector could eventually create an opportunity for investors.

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