Lululemon Drops After Bearish BMO Rating

Lululemon shares dropped 4% on 9 September before trimming losses to finish at $99.41, down 3.2% from the prior close. The decline came after BMO Capital Markets analyst Kelly Crago initiated coverage with an Underperform rating and a $70 price target.

According to TipRanks, Kelly Crago pointed to weakening demand in the Americas and China alongside pressure on premium margins. The analyst expects fiscal 2027 earnings to fall well below consensus estimates. The $70 price target implies roughly 32% downside from the previous close.

The downgrade followed a 17.7% drop five days earlier, when Lululemon cut its full-year guidance and reported a 4.3% decline in second-quarter net revenue to $2.42 billion. Total comparable sales fell 9%, including a 12% drop in the Americas. Diluted earnings per share came in at $2.92, down from $3.10 a year earlier, but included $134.5 million in tariff refunds under the International Emergency Economic Powers Act. That refund added 560 basis points to gross margin and $0.86 to diluted earnings per share. Excluding the refund, operating profit fell 13.4% to $453.7 million.

Management lowered its full-year 2026 revenue forecast to between $10.35 billion and $10.50 billion, and cut its earnings guidance to $9.48 to $9.73 per share. According to Fast Company, the retailer is also facing consumer pushback and negative brand sentiment in China. Lululemon is down 52.8% year to date and trades 54% below its 52-week high of $215.88 reached in January 2026.