Lululemon Athletica (LULU) could see sales rebound with its spring launch, or a new chief executive officer may need to do a costlier operational reset, BofA Securities said in a note Tuesday.
The analysts said that marketing spending appears relatively low at around 5% of revenue since fiscal 2020, compared with 7% to 9% for brands that have successfully turned around their businesses. This suggests Lululemon may need to invest more to reaccelerate growth.
Recent selling, general and administrative expense growth has largely supported international expansion, which has been a key driver aside from a brief slowdown in Q2 of 2025. Broad cost-cutting could risk slowing that momentum, the analysts added.
"We think innovation and newness could re-ignite the brand, though this may coincide with a margin reset that poses risk to Lulu's earnings," the analysts said, adding that the company would benefit from picking a CEO with strong product or brand experience. Attention is now focused on the Spring 2026 collection under new creative director Jonathan Cheung, who plans to raise new products to 35% of the assortment.
The company said earlier Tuesday that it will release its Q4 results on March 17.
BofA Securities adjusted its price target on Lululemon Athletica to $200 from $220 while keeping its neutral rating. Shares of the company were down 3.5% in recent trading.
Price: 169.99, Change: -6.18, Percent Change: -3.51
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