Lululemon just shocked the market. Minutes ago, the company said CEO Calvin McDonald will step down on January 31, 2026. At the same time, it lifted full year sales and profit targets, and approved a fresh 1.0 billion dollar buyback. Shares jumped in late trading. This is a bold reset after a bruising year.
What changed today
I have the numbers. Lululemon now expects full year revenue between 10.962 billion and 11.047 billion dollars. It also raised earnings per share to 12.92 to 13.02. The board cleared a 1.0 billion dollar repurchase plan.
The stock was recently near 187.01 dollars. It swung between 178.01 and 202.86 during the session. Market value sits near 22.18 billion dollars. The forward price to earnings multiple is about 12.6. That is far below where this brand has traded in recent years.
This update hit a market that had given up on the name. Execution must now meet the higher bar the company set for itself.
Why it matters for the stock
The setup is simple. The stock is down about 50 to 57 percent this year. U.S. demand has been soft. Tariff costs squeezed pricing power. Product assortments went stale. Investors lost patience.
Today’s news says the company is not standing still. The board is planning a leadership handoff. Management is telling investors that sales and profits are tracking better than feared. A buyback signals confidence in cash flow. It also adds a cushion under the share price.
Buybacks lift earnings per share and can steady a falling stock, but they do not replace real demand. Focus on sales quality.
Keep an eye on the next few months:
- Holiday sell through in the U.S., full price versus markdowns
- Tariff pass through into pricing, and any promo creep
- Inventory levels and clearance pace
- New product response in key categories like bottoms and outerwear
Can a new leader and fresh product reset demand
A change at the top can open doors. It can also rattle teams. The search for a permanent CEO starts now. The message to the street is clear. Strategy needs fresh energy.
Product is the core fix. Management plans to raise the share of new styles in assortments, from about 23 percent now to about 35 percent by spring 2026. More newness can bring traffic back. It can also support price. That matters if tariffs stay sticky. Shoppers will pay up for items that feel rare and fresh.
Pricing remains a tightrope. The brand faced pushback on earlier price moves. Heavy promotions would protect units but could hurt margins. A clean balance is vital in the first half of 2026.
Guidance is higher, but execution risk is, too. If new styles miss, the company may need more markdowns and the story weakens.
Investment view
Near term, the stock has room to bounce on relief and the buyback. Volatility will stay high. The intraday range tells the story. Long only funds will model the new EPS range against the current multiple. At a forward multiple near 12.6, the stock screens as cheaper than its history. The key question is whether that discount is deserved.
The 1.0 billion dollar buyback equals roughly 4 to 5 percent of the market cap. That is real support if cash generation holds. The raised EPS guide, 12.92 to 13.02, sets a new base. Hitting it requires steady U.S. demand and clean inventories. The product refresh, climbing to about 35 percent new styles by spring, is the swing factor.
My read, this is a credible first step. It is not a full fix yet. Bulls will point to margins, brand strength, and balance sheet flexibility. Bears will point to U.S. traffic and tariff costs. The tie breaker will be product.
Frequently Asked Questions
Q: What did Lululemon announce today?
A: A CEO transition set for January 31, 2026, higher full year revenue and EPS guidance, and a new 1.0 billion dollar buyback.
Q: Why is the stock moving now?
A: Investors see stronger profit guidance and the buyback as signs of confidence, after a year of weak demand and price pressure.
Q: Is the stock cheap at today’s levels?
A: The forward P.E. near 12.6 is below recent history. It looks attractive if the new EPS base holds and demand improves.
Q: What is the biggest risk from here?
A: Execution on new product. If fresh styles do not land with customers, Lululemon may need deeper promotions.
Q: What should investors watch next?
A: Holiday sell through, U.S. traffic trends, inventory discipline, and early reads on the spring product refresh.
Lululemon just rewrote its 2025 script. A clearer plan, higher guidance, and a buyback can reset sentiment. Now comes the hard part. The brand must prove it can spark demand with better product, protect price, and grow into the new numbers. If it does, today will look like the turn. If not, the discount will stick. 📈
