Shares of Lululemon (NASDAQ: LULU) jumped sharply on Friday after the company announced a major leadership change and released a stronger-than-expected quarterly report, renewing optimism about the apparel maker’s turnaround prospects.
The stock rose 9.6% for the day to around $205, marking one of its best single-day gains this year and outperforming the broader market.
Notably, the stock is backed by some of Wall Street’s most influential investors, including “Big Short” legend Michael Burry, who revealed in November that he had added 50,000 shares of Lululemon.
Why LULU stock popped
The boost came after Lululemon announced that long-time CEO Calvin McDonald would step down on January 31, ending a tenure that began in 2018 and saw revenue triple.
While McDonald oversaw global expansion, concerns had grown over the brand’s slow response to changing North American consumer preferences. The leadership change is now seen as an opportunity to reset strategy and reignite growth.
Lululemon has faced sluggish momentum in the Americas since early 2024. Comparable sales were flat in Q1 and declined thereafter, ending the year down 1%. In the latest quarter, America’s sales declined 2%, with comparable store sales dropping 5%, highlighting pressure in its biggest market.
In contrast, international markets have become the main growth driver. Q3 revenue increased 7% year-over-year to $2.56 billion, surpassing expectations by 3%, mainly driven by Asia and Europe, where revenue climbed 33% and comparable store sales increased 18%. Digital sales surged 13% to $1.1 billion, making up 42% of quarterly revenue.
Profitability also beat expectations, with EPS of $2.59 despite a year-over-year decline. Strong earnings and upgraded full-year guidance, sales of $10.96–$11.05 billion, and EPS of $12.92–$13.02 helped fuel the stock’s rally.
Looking forward, Lululemon plans to speed up product innovation, increase new-style penetration by next spring, and shorten product development timelines from two years to 12–14 months.
Wall Street cautious on LULU stock
Meanwhile, Wall Street analysts at TipRanks maintain a ‘Hold’ rating on Lululemon, reflecting cautious expectations for the premium athleisure brand.
Based on 23 analysts’ ratings, the consensus favors holding the stock, with one ‘Buy’, 22 ‘Holds’, and no ‘Sells’. The average 12-month price target is $199.56, implying a modest 2.64% decline from the recent closing price. Projections vary widely, from a low of $146 to a high of $303.
Overall, LULU shares have faced considerable pressure throughout 2025, trading well below earlier peaks as growth slowed in the Americas. Investors are closely watching for signs of sustained momentum heading into 2026.
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