Founder Chip Wilson has been pushing to nominate his own candidates to the company’s board and has asked for sweeping changes at the athletic-wear company.
- Lululemon will report its fiscal fourth-quarter results after the market closes on Tuesday.
- Analysts expect sales to decline 1% and adjusted profit to shrink 22% - Koyfin.
- After a sharp slide in LULU stock in recent weeks, Stocktwits sentiment has moved up to ‘extremely bullish’ ahead of the earnings report.
Lululemon Athletica is heading into earnings under unusual pressure, with Wall Street expecting its first quarterly revenue decline in nearly six years on Tuesday. This comes as the company struggles to revive sales while searching for a new chief executive and facing mounting pressure from its founder, who has criticized the management for months and is pushing for sweeping changes.
Analysts expected Lululemon’s fiscal fourth quarter revenue to decline 1% to $3.58 billion, per Koyfin, in what would mark the first time sales would have declined since the April quarter of 2020.
Adjusted profit is expected to drop 22% to $4.78 per share, marking the third consecutive quarter of shrinking bottom-line growth.
Founder Proxy Fight Escalates
Since October, Lululemon founder Chip Wilson, a major shareholder, has been on a campaign against the company’s board, accusing it of weak oversight and slow engagement as he continues to push for sweeping changes.
As part of his proposed remedy, Wilson launched a proxy fight in December, nominating former On Running co-CEO Marc Maurer, former ESPN Chief Marketing Officer Laura Gentile, and former Activision CEO Eric Hirshberg to the board, but said the company has not taken his proposal seriously.
Lululemon is currently led on an interim basis by its finance chief and chief commercial officer, following Calvin McDonald's stepping down as CEO earlier this year.
LULU Stock: Wall Street Turns Cautious
As the public fight rages on, the stock has taken a beating. LULU shares are down 23% year to date, after declining 46% over 2025.
Amid the sharp share slide, retail sentiment on Stocktwits has moved up and has remained in the ‘extremely bullish’ zone since the middle of last week.
Earlier this week, Evercore ISI reduced its LULU price target to $175 From $215, while Jefferies slashed it to $170 From $185. The new levels imply a 9% and 34% upsides, respectively.
Goldman Sachs, UBS, and Bank of America have also trimmed their price targets in recent weeks. Currently, 29 of 32 analysts rate the stock ‘Hold,’ with only 3 rating it ‘Buy,’ per Koyfin. Their average price target of 205.88 implies a 29% upside from the stock’s last close.
Lululemon Athletica should look for a new leader with product experience, Jefferies analysts say in a note, according to Dow Jones Newswires, pointing to the brand's recent quality issues and focus on lifestyle clothing rather than its core athletic wear.
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