BREAKING: Lululemon stock rips on earnings beat, buyback, and a CEO shakeup
Lululemon lit up the tape today. I can confirm the retailer topped Q3 estimates, raised its full year outlook, unveiled a 1 billion dollar buyback, and announced a leadership change. Shares swung hard on the news. The stock touched 209.76 at the high, sank to 178.01 at the low, and last traded near 187.01. Market cap sits at about 22.18 billion dollars, with a P E near 12.6.
What lit the fuse
The results were clear and clean. Third quarter revenue reached 2.6 billion dollars, up 7 percent. Adjusted EPS came in at 2.59, well ahead of the Street. The company also raised its full year view. It now sees EPS of 12.92 to 13.02, and revenue of 10.962 to 11.047 billion dollars. That reset matters. It signals control over costs and demand that is holding up better than feared.
The new buyback landed with force. The board approved 1 billion dollars of repurchases. At current value, that is about 4 to 5 percent of the company. In my read, that is not window dressing. It is a support level for the equity and a statement on valuation.
Lululemon trades near 12.6 times trailing earnings, with EPS of about 14.65. That is far below the multiple most investors once paid for this name.
The leadership turn
There is a big change at the top. CEO Calvin McDonald will step down on January 31, 2026. He will stay on as a senior advisor for a short period to help the handoff. The board named CFO Meghan Frank and Chief Commercial Officer André Maestrini as interim co CEOs.
This setup points to continuity on finance and go to market execution while a permanent search runs. Investors usually fear leadership gaps. Today, the numbers softened that blow. The co CEO pairing signals stability in the near term and keeps discipline around inventory and pricing.
Durable turn or quick bounce
This is the core question. The quarter was good, but the backdrop is still mixed. The U.S. consumer is cautious. Tariffs remain a tax on imported goods. Inventory overhangs have eased, yet they are not gone. Those pressures hit Lululemon earlier this year and forced cuts to guidance. International growth, led by Asia, kept the engine running. That offset weakness at home.
The raised outlook suggests the worst may be past. It also sets a higher bar for the key holiday stretch. Execution must be tight. Margin, inventory turns, and traffic in the Americas will decide if this rally has legs. The buyback adds a cushion, yet buybacks do not fix demand. Product newness and price discipline do.
Watch three things next. Gross margin in the holiday quarter, inventory levels and turns, and U.S. store traffic versus last year.
Valuation, cash returns, and the setup
At about 12.6 times trailing earnings, the stock is no longer priced for perfection. That multiple, tied to a global growth brand with strong returns on capital, looks reasonable. The 1 billion dollar buyback can lift EPS and ease volatility on weak days. It also gives management flexibility if the stock dips.
Here is how I see the near term trade. The guide raise and beat justify a re rating from stressed to stable. The leadership plan avoids a vacuum and keeps financial guardrails in place. International strength still matters. If U.S. demand firms even modestly, the stock can rerate higher from here.
Key catalysts to track in the next two quarters:
- Holiday comps in North America and China
- Gross margin direction, including freight and markdowns
- Inventory turns and cash flow
- Progress on the permanent CEO search
A tariff shock, a soft holiday, or aggressive discounting could hit margins and flip sentiment fast.
The bottom line
Today looks like more than a mood swing. The numbers beat, the outlook is higher, and cash is coming back to shareholders. Leadership is changing, but continuity is in place. The setup is not risk free, yet the risk reward has improved. For long term investors, this reads like the early stages of a reset. For traders, expect choppy action as the market tests the holiday run and the new guide.
Frequently Asked Questions
Q: Why did Lululemon stock jump today?
A: The company beat Q3 estimates, raised full year guidance, approved a 1 billion dollar buyback, and laid out a clear leadership plan.
Q: Who will lead after the CEO steps down?
A: CFO Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co CEOs after January 31, 2026.
Q: Is the stock cheap now?
A: At about 12.6 times trailing earnings, the valuation looks reasonable for a global brand, but it depends on holiday execution and U.S. demand.
Q: What are the biggest risks from here?
A: Weak U.S. traffic, tariff costs, heavy discounting, and any stumble in product or inventory control.
Q: What should investors watch next quarter?
A: Gross margin, inventory turns, holiday comps, China growth, and updates on the CEO search.
Conclusion: Lululemon just reintroduced itself to the market. A solid quarter, a higher bar, and a new chapter at the top. If demand holds and margins stay firm, today’s spike can become a base for the next leg higher. If not, the buyback may be the safety net that keeps the reset on track.
