Lululemon's Share Buyback: A Band-Aid on a Bleeding Stock

Lululemon Athletica (NasdaqGS:LULU) shareholders are in for a wild ride. The stock has plummeted 10% in just one week, and the company's share buyback program isn't doing enough to stem the bleeding. Let's dive into the chaos and figure out what's really going on.

First things first, Lululemon's recent performance has been lackluster, to say the least. The company's guidance for FY2025 suggests revenues will hit $11 billion, indicating a slowdown in growth to about 5.6%, nearly half of the 10% growth seen the previous year. For Q1, the guidance is for a 6-7% year-over-year revenue increase, which also seems pretty conservative. This softer guidance has raised concerns among investors about the company's future growth prospects.

But wait, there's more! Lululemon cited weaker consumer spending as the main culprit for the conservative outlook. This macroeconomic trend has affected Lululemon's performance, leading to a decline in stock price. Although Lululemon has lost nearly a quarter of its value so far in 2025, most of this decline isn’t due to its recent performance. The concern mainly comes from the softer guidance for FY2025. Lululemon posted a beat across the board in Q4 despite somewhat weak comp sales, which grew by 3% year-over-year. This was partly offset by a 60.4% increase in gross margins, which grew by 100 basis points. For the year, Lululemon reported revenues of $10.6 billion in 2024, up from $9.6 billion in 2023, marking an annual growth of 10.4%.

Now, let's talk about the share buyback program. Lululemon's board of directors approved a $1 billion increase to its stock buyback program, bringing the total remaining to $1.7 billion, or 4.2% of its current market cap. This program allows the company to repurchase shares opportunistically, supporting its organic growth objectives and driving shareholder value. But is it enough?



The share buyback program is a band-aid on a bleeding stock. It's not addressing the root cause of the problem, which is the company's conservative guidance and weaker consumer spending. Lululemon needs to do more than just buy back shares. It needs to innovate, expand, and find new ways to grow. The company's recent performance has been lackluster, and the share buyback program isn't doing enough to stem the bleeding.

So, what should investors do? Stay away from Lululemon until the company shows signs of real growth. The share buyback program is a band-aid on a bleeding stock, and it's not enough to offset the recent 10% weekly decline. Lululemon needs to do more than just buy back shares. It needs to innovate, expand, and find new ways to grow. The company's recent performance has been lackluster, and the share buyback program isn't doing enough to stem the bleeding.