lululemon athletica enters the final week of July with a subtle but meaningful shift in the short-selling story — bears who had been building for weeks are now trimming, even as the broader negative thesis from the Street grows louder.
The clearest change from last week's note is in short positioning. Short interest has pulled back roughly 2% over the week to 8.6% of the free float — around 9.8 million shares — after peaking near 10.2 million just days ago. That monthly build of 34% is still large and deliberate, but the near-term direction has reversed. The ORTEX short score has nudged down to 50.4 from a recent high near 51.9, consistent with modest short covering rather than fresh conviction. Borrow conditions remain loose. Availability is a very comfortable 700% of short interest — meaning roughly seven shares are available to borrow for every one already shorted — and the cost to borrow has dropped 32% over the week to just 0.29%. Bears are not being squeezed, but neither are they pressing new positions right now. The put/call ratio has edged above its 20-day average at 0.73, around one standard deviation high — not an alarm, but options traders have become slightly more defensive over the past fortnight as the PCR trended from the low 0.66s to its current level.
The Street narrative, meanwhile, has not softened. Analyst actions over the past three weeks have moved in one direction only. Morgan Stanley reinstated with an Underweight at $93 in early July. Truist downgraded to Sell with a $94 target on July 16. Wells Fargo trimmed its target to $105 on July 21 while holding Equal-Weight. Three firms, three negative moves, in under three weeks. The consensus mean target of $127.73 now sits 7% above the current price of $119.03, but that average is propped up by older, higher targets that predate June's earnings-driven cuts. The bear case centres on leadership transition uncertainty, fading brand momentum in North America, China PR headwinds, and tariff-driven margin compression. The bull case — that new product introductions can inflect top-line growth — has almost no recent analyst support in the tape. EPS momentum factor scores rank in the 11th–19th percentile of the universe, a weak reading that reflects how aggressively estimates have been revised lower.
Valuation has compressed but hasn't yet reached distressed levels. The trailing P/E has fallen to around 10.7x and EV/EBITDA to 5.8x, both down over the past 30 days. Those multiples price in a meaningful deterioration from the brand's historical premium, though the bears cited in recent analyst notes point to a scenario where further margin contraction — from tariffs, markdowns, and fixed-cost deleverage — could push multiples even lower. The stock is up 5% on the week and has recovered from the post-June earnings low, which itself saw a 9.4% one-day drop. Peer VFC fell 17% on Wednesday alone, a reminder of how sharply apparel names can de-rate on earnings disappointment. ONON gained 3.4% over the week — a more constructive read on athletic wear demand broadly, though the brands occupy different positions in the market.
One note on insider activity: a director bought roughly $500,000 of stock at $117 in mid-June, and the company's president added ~$495,000 earlier in April at $151. Net 90-day insider flow is modestly positive at around $3.4 million, largely driven by those two purchases. It is a thin positive signal against a backdrop of CFO and executive-level option-related sales, and the buys were made at prices above current levels — the director is already underwater on the June purchase.
With September 3 earnings now five weeks out, the key tension to watch is whether the short-covering trend of the past few days continues — or whether sellers return as the stock approaches its $127 mean analyst target from below and the pre-earnings window tightens.
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