What Happened?

Shares of athletic apparel retailer Lululemon (NASDAQ: LULU) jumped 5.1% in the afternoon session after the company reported fourth-quarter earnings and revenue that beat expectations, which appeared to outweigh its weaker-than-anticipated forecast for 2026. .

For its fourth quarter of 2025, the athletic apparel maker posted revenue of $3.64 billion and earnings per share of $5.01, both topping analyst estimates. Same-store sales, a key metric for retailers, also grew by 3% year-on-year. However, the company's outlook was less impressive. Lululemon’s revenue guidance for the upcoming first quarter and its earnings per share forecast for the full year both fell short of Wall Street's consensus estimates. The stock initially traded down after the report was released, but the subsequent positive move suggests investors ultimately focused on the strong quarterly performance over the cautious guidance.

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What Is The Market Telling Us

Lululemon’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 19.4% on the news that the company reported underwhelming Q1 2025 results. Its EPS guidance for next quarter missed and its full-year EPS guidance fell short of Wall Street's estimates. Sales and earnings were roughly in line with expectations, with the softness resulting from slowing growth in the Americas, where comparable sales declined, despite international markets continuing to deliver significantly better growth. Overall, this was a weaker quarter.

Lululemon is down 20.2% since the beginning of the year, and at $168.11 per share, it is trading 50.8% below its 52-week high of $341.53 from March 2025. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at only $548.86.

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