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Lululemon (NASDAQ: LULU) has seen a significant 30% decline since its Q1 2025 earnings report, now trading at approximately $229. The stock has dropped 40% year-to-date, contrasting sharply with the S&P 500’s 2% gain. The company’s revenue rose by 7% to $2.37 billion, and earnings per share (EPS) increased by 2% year-over-year to $2.60, exceeding expectations. However, a modest 1% same-store sales gain and a lowered full-year outlook fueled investor concerns, overshadowing the company’s strong financial performance.
Lululemon’s market cap stands at $27 billion, with a price-to-earnings ratio of just 15x, significantly below its historical average and the broader market’s 27x. The company’s cash flow yield of nearly 6% reflects a solid financial foundation, supported by an operating margin of 23.4% and a net income margin of 16.8%. Despite these strengths, the stock experiences heightened volatility, having previously dropped 46% during the 2022 downturn and 92% during the 2008 crash.
Over the past three years, Lululemon reported a revenue CAGR of 19%, well above the S&P 500’s 5.5%. With a current debt-to-equity ratio of just 6.0% and $1.3 billion in cash, the company enjoys a robust balance sheet, positioning it for sustained growth despite market fluctuations.
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