Michael Burry Likes Lululemon Stock. But the Math Only Works If Sales Stop Shrinking.
Lululemon (LULU) shares fell to a 52-week low after cutting its full-year outlook, with sales declining 9% in Q2. Michael Burry increased his stake, predicting 15-20% annual returns over 15-20 years if the brand recovers. The company has $1.4B in cash, no debt, and is buying back shares. Earnings are expected to fall 28% this year, with Q3 revenue projected to drop 10-11%.
How this was made
The 30-second read
Why it matters
The guidance cut is a fresh, material disclosure for a large‑cap consumer‑discretionary stock, likely driving further price weakness.
Market read
Guidance cut and sales slowdown are material for LULU and may influence the broader apparel sector.
What to watch
Buyback activity and strong cash position may provide support despite earnings decline.
Background
Lululemon reported a 4% revenue decline in Q2 2026 and a 9% comparable‑sales drop, prompting a second guidance cut this year.
Ticker impact
Lululemon cut its full‑year earnings guidance to $9.48‑$9.73 per share, down about 28% from last year, after reporting a 4% revenue decline and accelerating sales shrinkage.
Expect continued downside pressure; price may test lower support around $90‑$95.
The guidance reduction is a primary disclosure for a large‑cap name, and the sales decline is accelerating, indicating material earnings risk.
Market effects
Athletic‑apparel sector may see broader pressure as peers face similar demand slowdown.
U.S. consumer discretionary sentiment could weaken, affecting related retailers.
Limited; impact confined mainly to U.S. equity markets.
Counterpoint
If the new CEO stabilizes comparable sales, the stock could rebound on a valuation floor.
Key entities
- companyLululemon Athletica Inc.
Athletic‑apparel retailer with US listing (LULU).
- investorMichael Burry
Prominent value investor who disclosed a large position in Lululemon.
