Lululemon Athletica (LULU 0.45%) just reported financial results for its fiscal 2025 second quarter (ended Aug. 3). The market wasn't pleased, as the stock tanking on the day after the announcement clearly shows. Investors weren't happy with weaker-than-expected revenue guidance.
The company's downward spiral continues a very discouraging trend for shareholders. If you'd invested in Lululemon stock exactly five years ago, here's how much money you'd have today.
Image source: Getty Images.
Multiple headwinds
As of Sept. 5, Lululemon shares have declined a gut-wrenching 53% over the trailing-five-year period. An initial $1,000 investment would be worth just $470 today. That's a truly disappointing outcome, especially when you consider the fact that the S&P 500 index has climbed 89% during the same time.
A number of headwinds are to blame. Lululemon's growth has slowed dramatically, with same-store sales in the Americas region falling 4% in Q2. There is lots of competition in the athleisure space, a situation further complicated by ever-changing consumer preferences. Lululemon's product assortment is driving excitement, but a softer economic backdrop doesn't encourage people to spend on expensive clothing and footwear.
NASDAQ: LULU
Key Data Points
Getting back on track
Lululemon's downfall is surprising. In the five years leading up to its all-time high in December 2023, the stock had soared 321%. The company was posting impressive growth and strong profits, as its premium brand continued to find success not only here in North America, but across the globe.
Investors are certainly hoping the company can turn things around. That could take some time, though. Revenue is projected to rise by only 5% (at the midpoint) in fiscal 2025.
The bulls might find no better time to scoop up shares than right now. Lululemon can be bought at a dirt cheap price-to-earnings ratio of 14.
