Jim Cramer: Lululemon Is a “Thoroughly Broken Stock. I Can’t Give You a Good Reason to Buy It”

Jim Cramer delivered a blunt verdict for Lululemon (NASDAQ:LULU | LULU Price Prediction) on his September 10 Mad Money segment, saying: “In less than three years, Lululemon has gone from one of the greatest growth stories ever told to a thoroughly broken stock.“

Shares closed at $98.97 on Friday, and while the stock actually rose 2.16% in the session, $LULU is down 52.48% year to date and 76.79% over five years.

Jim Cramer took a tough stance on Lululemon in the segment: “I can’t give you a good reason to buy Lululemon even after these stunning declines. The athleisure category remains in the doghouse, and the competition is as crowded as ever, slashing price-cutting margins.”

Cramer Calls Lululemon a “Thoroughly Broken Stock”

Cramer framed the current athleisure landscape as unrecognizable from a few years ago: “The athleisure category has become viciously competitive. Ten years ago there was Lululemon and not much else. Now they’re up against Alo Yoga and Vuori. On the high end, Athleta; many other brands like Fabletics coming from the low end.”

Cramer believes the athleisure category is fragmenting, meaning legacy giants like Lululemon are giving market share away to up-and-comers.

Cramer also referenced a Texas forever-chemicals investigation, a founder-led proxy fight, and a China yoga-festival drum controversy as pressure points on the brand. Management discussed on the Q2 earnings call that guests are seeking “away-from-body” styles and that women’s leggings sales fell approximately 20% in Q2.

What LULU’s Earnings Release Actually Showed

For the quarter ended August 2, 2026, Lululemon reported revenue of $2.42 billion, down 4.3% year over year and 5% in constant currency. Global comparable sales fell 9%, or 10% on a constant dollar basis.

Americas comps dropped 12%. The China Mainland figures tell the real story: comps came in at -2% as reported but -8% in constant dollars.

Gross margin expanded 200 basis points to 60.5%, though 560 basis points of that came from an IEEPA tariff refund of $134.5 million pre-tax, which contributed 86 cents to EPS. Operating income fell to $453.7 million, down 13.39%.

Cramer characterized the increase in gross margins as: “86% of that came from tariff refunds. It’s not phony, but it is funny.”

Guidance Is Where Things Get Ugly

Q3 guidance is where the outlook stings. Lululemon guided revenue to $2.29 billion to $2.32 billion, a decline of 10% to 11%, with diluted EPS of 93 to 98 cents versus $2.59 a year ago. Full-year revenue was cut to $10.35 billion to $10.50 billion and EPS to $9.48 to $9.73.

If earnings continue to fall, the stock could drop further, even though $LULU already trades at under 10x forward earnings today.

A New CEO Inherits a Broken Growth Story

The earnings release quoted the two interim co-chief executives, Meghan Frank, the CFO, who said the company is taking “a prudent approach with our revised full-year outlook,” and Andre Maestrini, who said the team looked forward to welcoming the incoming CEO.

Heidi O’Neill’s first day as CEO was September 8, 2026. She inherited an inconsistent product cycle, a traffic problem in the two largest markets, and guidance that assumes no further tariff recovery.

When Will LULU Be Cheap Enough to Buy?

At roughly 10 times forward earnings, Lululemon looks dramatically cheaper than it did during its growth-stock glory days. The problem is that earnings are now moving in the wrong direction.

Until comparable sales stabilize in the Americas, China improves, and the new leadership team proves it can reignite demand, a low multiple alone may not be enough to make the stock a good investment today.

That’s ultimately Cramer’s point: Lululemon stock has already collapsed, but the business hasn’t yet given investors a compelling reason to bet on the recovery.

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