On Monday, Barclays reaffirmed its Equalweight rating on Lululemon Athletica Inc. (NASDAQ: NASDAQ:LULU) with a steady price target of $261.00. Following a visit to China, the firm gained insights into Lululemon's growth opportunities in the region. The athletic apparel company is successfully establishing itself as a premium, even luxury, brand in Mainland China. This strategy is complemented by a localized approach that emphasizes community empowerment and the brand's distinctive "sweat" identity.
The analyst pointed out that international sales currently account for approximately 21% of Lululemon's revenue for the fiscal year 2023. This segment is anticipated to be a key driver for the company’s future expansion. The emphasis on the Chinese market is part of Lululemon's broader international strategy, which is central to its growth narrative.
During the recent analyst day, there was a notable lack of fresh details about Lululemon's business in the Americas. This region remains the most uncertain element of the company's performance, according to the firm's analysis. The absence of new information on this front has contributed to Barclays' decision to maintain its Equalweight stance on the stock.
Lululemon has been experiencing a positive consumer response in China, aligning with the brand's premium positioning. The company's focus on empowering local communities through its marketing efforts appears to be resonating well with the target audience.
Barclays' reiteration of the Equalweight rating and price target suggests a cautious but stable outlook on Lululemon's stock. The company's international strategy, particularly in China, is a bright spot, but uncertainties in the Americas market are tempering expectations.
In other recent news, Lululemon Athletica Inc. reported a 7% increase in its second-quarter total revenue, reaching $2.4 billion, and earnings per share (EPS) of $3.15, surpassing the expected $2.94. However, the company revised its fiscal year 2024 sales growth forecast from 11-12% to 8-9%. In response, several analyst firms have updated their ratings. Morgan Stanley adjusted its price target for Lululemon to $314, while Baird maintained an Outperform rating and a price target of $350.
Jefferies maintained an Underperform rating with a price target of $220, citing potential weakening in the company's fundamentals. BofA Securities maintained its Buy rating for Lululemon with a steady price target of $355.
These are recent developments and reflect the ongoing financial performance and market expectations for Lululemon. The company's international expansion, particularly in China, is a significant factor in these ratings, with Baird highlighting Lululemon's effective localization of its international strategy.
InvestingPro Insights
To complement Barclays' analysis of Lululemon Athletica Inc. (NASDAQ: LULU), InvestingPro data offers additional financial context. The company's market capitalization stands at $34.16 billion, reflecting its significant presence in the athletic apparel market. Lululemon's impressive gross profit margin of 58.54% for the last twelve months as of Q2 2025 underscores its success in maintaining premium pricing, which aligns with Barclays' observation of its luxury brand positioning in China.
InvestingPro Tips highlight that Lululemon "holds more cash than debt on its balance sheet" and has "liquid assets exceed short term obligations," indicating a strong financial position to support its international expansion plans, particularly in China. The company's revenue growth of 13.02% over the same period demonstrates its continued market penetration, although the quarterly revenue growth of 7.33% in Q2 2025 suggests a more moderate recent pace.
With a P/E ratio of 21.47, Lululemon is "trading at a low P/E ratio relative to near-term earnings growth," according to another InvestingPro Tip. This could indicate potential upside if the company successfully capitalizes on its international growth opportunities, especially in the Chinese market as noted by Barclays.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights, with 8 more tips available for Lululemon on the platform.
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