What Happened?

Shares of athletic apparel retailer Lululemon (NASDAQ:LULU) fell 15% in the morning session after the company reported underwhelming fourth quarter 2024 results and provided full-year revenue and EPS guidance below analysts' estimates. The Americas region showed flat comparable sales during the quarter, while international markets posted a 20% increase. 

Following the underwhelming performance, Raymond James analysts downgraded the stock's rating from Buy to Hold, adding "We lower LULU to Market Perform from Outperform after F4Q24 expectations but F1Q25 and FY25 guidance were set below expectations."

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lululemon? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Lululemon’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Lululemon and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 4 months ago when the stock gained 18.4% on the news that the company reported strong third-quarter 2024 results, which surpassed analysts' revenue expectations on a convincing same-store sales beat. The result revealed strong double-digit top-line growth in China and the rest of the World. The company also observed record engagement metrics at the top of the funnel during the Black Friday event mostly from its online channels. This signaled a strong start to the holiday shopping season. Looking ahead, guidance was roughly in line, which was encouraging. Overall, this quarter had some key positives.

Lululemon is down 22.3% since the beginning of the year, and at $289.44 per share, it is trading 31.3% below its 52-week high of $421.16 from January 2025. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at an investment worth $1,492.

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