When Soundwatch Capital LLC quietly added 52,001 shares of lululemon athletica inc. to its portfolio in Q2 2025, it wasn’t just another trade — it was a bet on resilience. The $12.35 million position, disclosed in an SEC filing on November 23, 2025, makes lululemon the firm’s 28th-largest holding, a modest slice of its total assets but a telling one in a market where confidence is fraying. The move comes as major Wall Street firms — including Telsey Advisory Group, Goldman Sachs, and Sanford C. Bernstein — have slashed price targets and downgraded the stock, even as the company continues to grow revenue.
Conflicting Signals: Revenue Up, Ratings Down
lululemon reported $2.53 billion in revenue for its second quarter — a 6.5% year-over-year jump, but still $20 million below analyst expectations. That gap, though small in percentage terms, sent ripples through the investment community. Investors aren’t just looking at growth anymore; they’re scrutinizing margins, consumer spending patterns, and whether the brand can maintain its premium positioning amid economic uncertainty. The company’s earnings per share of $3.15 last year was strong, but this year’s guidance of $12.77 to $12.97 for FY 2025 feels cautious. Analysts, meanwhile, are betting higher — projecting $14.36 EPS — a disconnect that suggests either optimism or disconnect.
Here’s the twist: while analysts are pulling back, institutions like Charles Schwab Investment Management Inc. are quietly adding shares. Schwab increased its stake by 10,115 shares, now holding over 764,000 shares worth $181.6 million. Richard W. Paul & Associates LLC also grew its position by 2.8%. These moves suggest some institutional players see value in the dip — or are hedging against broader market volatility. Soundwatch’s entry, though small, fits that pattern: a calculated, low-profile accumulation during a period of public doubt.
The Downgrade Wave: Why Analysts Are Losing Faith
Between September and November 2025, a cascade of downgrades hit lululemon like a chain reaction. Telsey Advisory Group cut its rating from “outperform” to “market perform” and slashed its price target from $360 to $200. Baird R.W. followed with a “strong-buy” to “hold” downgrade. Goldman Sachs lowered its target to $180 and slapped on a “neutral” rating. Sanford C. Bernstein didn’t just lower its target — it went from “outperform” to “market perform” with a $190 target. Even Stifel Nicolaus, which had been holding steady, cut its target from $324 to $205.
These aren’t random adjustments. They reflect growing concerns about consumer fatigue in the athleisure sector. After years of pandemic-driven demand, shoppers are tightening belts. Competitors like Nike and Adidas are fighting back with aggressive pricing. And lululemon’s premium pricing — once a moat — now looks vulnerable. The company’s direct-to-consumer sales, once a bright spot, are slowing. Store traffic in key markets like the U.S. and Canada is flattening. The question isn’t whether lululemon will survive — it will. But whether it can grow at the pace investors once expected?
Who Owns the Company? Insiders Are Holding Tight
Here’s a detail many overlook: company insiders still own just 0.54% of lululemon’s outstanding shares. That’s low. For a company with such a cult-like following, you’d expect leadership to have skin in the game. The fact that executives aren’t buying more — and in some cases, have been selling — adds to the skepticism. It doesn’t mean the company is doomed. But it does suggest confidence isn’t unanimous at the top.
Meanwhile, the stock trades under a “Hold” consensus rating. No one’s screaming “sell,” but no one’s screaming “buy” either. That’s the new normal. Investors are waiting. For the next earnings report. For a new product line. For a sign that the brand still has magic.
What’s Next? The December 11th Catalyst
The next big moment arrives on December 11, 2025, when lululemon reports its third-quarter results. That’s when the market will get its clearest signal yet: Are sales rebounding? Is the gross margin holding? Are international markets — particularly Asia and Europe — picking up the slack? The guidance range for Q3 is $2.18 to $2.23 EPS. If lululemon hits the high end, the downgrades may start to look overdone. Miss it, and the stock could slide further.
And here’s the quiet truth: Soundwatch Capital didn’t buy because it loves yoga pants. It bought because it saw a company with strong brand loyalty, global reach, and a business model that still works — just not as explosively as before. In a market where growth is scarce, sometimes holding on to a slow-burn winner beats chasing the next hot thing.
Behind the Brand: More Than Just Activewear
lululemon isn’t just a clothing company. It’s a lifestyle brand built on community, mindfulness, and premium pricing. Its stores double as yoga studios. Its ambassadors are real athletes, not paid influencers. The company operates in North America, Australia, Asia, Europe, and the Middle East — a global footprint few competitors match. But that global reach also means exposure to currency swings, geopolitical risks, and varying consumer habits. In China, for example, local brands like Anta and Li-Ning are gaining traction. In Europe, inflation is hitting discretionary spending. The challenge isn’t just about selling more leggings — it’s about proving the brand’s value in a world that’s moving on.
Frequently Asked Questions
Why did analysts downgrade lululemon despite revenue growth?
Analysts downgraded lululemon because revenue growth has slowed from double-digit highs to 6.5%, and margins are under pressure. The $20 million miss against estimates signaled weaker-than-expected consumer demand, especially in key markets like the U.S. and Canada. Combined with rising competition and premium pricing risks, firms like Telsey and Goldman Sachs concluded the growth story is no longer as compelling as before.
Is Soundwatch Capital’s investment a bullish sign?
It’s a nuanced one. Soundwatch’s $12.4 million position is small — just 0.1% of its portfolio — suggesting it’s a tactical, not a strategic bet. But it’s significant because it came during a wave of downgrades. Institutions like Charles Schwab are also adding shares, indicating some investors believe the stock is oversold. This isn’t a vote of confidence in explosive growth — it’s a bet on durability.
How does lululemon’s insider ownership compare to industry peers?
At 0.54%, lululemon’s insider ownership is below average for premium retail brands. Nike’s insiders hold about 1.2%, and Lululemon’s former CEO, Chip Wilson, still holds a meaningful stake. Low insider ownership can signal leadership isn’t fully aligned with long-term shareholder value — a red flag for some investors, especially when combined with recent executive departures and lack of buybacks.
What’s at stake in lululemon’s December 11 earnings report?
The December 11 report will reveal whether Q3 revenue and EPS meet the $2.18–$2.23 guidance range. A beat could trigger a short squeeze and analyst upgrades, especially if international sales rebound. A miss — particularly if gross margins drop below 54% — could push the stock below $180, triggering more downgrades and margin pressure from lenders. This is the make-or-break moment for 2025.
Why are institutions like Schwab buying while others are selling?
Large asset managers like Schwab often use long-term, low-turnover strategies. They’re less reactive to quarterly misses and more focused on brand strength and cash flow. Schwab may see lululemon as a defensive play in discretionary spending — a brand with loyal customers who won’t abandon it even during downturns. Short-term traders, meanwhile, are reacting to the downgrade cascade and slowing growth metrics.
Could lululemon’s stock recover in 2026?
Yes — but only if it expands into new categories beyond apparel, like digital fitness or premium footwear, and reinvigorates international growth. Its $14.36 EPS forecast implies a 12% jump from current guidance — possible, but not guaranteed. If the company can stabilize margins and announce a major innovation in Q1 2026, the stock could rebound to $220–$240. Without that, it may trade sideways for the next 12–18 months.
