Jim Cramer: Lululemon Is a “Thoroughly Broken Stock. I Can’t Give You a Good Reason to Buy It”
Jim Cramer called Lululemon (LULU) a 'thoroughly broken stock,' citing a 52% YTD decline and 77% drop over five years. The company projected Q3 revenue to fall 10-11% with EPS of 93-98 cents, down from $2.59 a year ago. Cramer attributed the struggles to intense competition in the athleisure market and declining women's leggings sales. LULU's Q2 revenue was $2.42B, down 4.3% YoY, with global comparable sales falling 9%.
How this was made
The 30-second read
Why it matters
The combination of earnings miss, weak guidance, and high‑profile negative media coverage creates a bearish catalyst for LULU.
Market read
Lululemon’s disappointing earnings and guidance, coupled with high‑visibility criticism, suggest short‑term downside risk for the stock and potential spillover to the broader athleisure sector.
What to watch
Tariff refund boosted margins; if similar refunds recur, earnings volatility could be lower than implied.
Background
Cramer’s commentary amplifies the negative tone of Lululemon’s earnings release, highlighting competitive pressure and leadership change.
Ticker impact
Lululemon reported Q2 results with revenue down 4.3% YoY, guidance for Q3 revenue down 10-11% and EPS 93-98 cents, and new CEO Heidi O'Neill started Sep 8.
Potential short-term decline of 3-5% as investors digest the guidance.
Revenue contraction, steep earnings decline, and a new CEO increase uncertainty; Cramer’s negative commentary adds sell pressure.
Market effects
Athleisure sector faces heightened competition, could weigh on peers like Nike and Under Armour.
Weak China comps may pressure other consumer discretionary names with exposure to the region.
Large‑cap consumer discretionary name, so broader market sentiment may be affected.
Counterpoint
The stock trades at sub‑10x forward earnings, offering a value entry if the turnaround materializes.
Key entities
- executiveHeidi O'Neill
New CEO appointed Sep 8, 2026.
- analystJim Cramer
Host of Mad Money, publicly called LULU a 'thoroughly broken stock.'
