Lululemon heads into its September 3 earnings report with short sellers sitting on meaningful positions, the cost to borrow creeping higher, and a Street that has spent months cutting targets but has yet to find a floor.
Short interest at 8.5% of the free float is the central tension this week. That level has been broadly stable — flat on the week, but up nearly 11% over the past month — suggesting bears added conviction in July and have been sitting tight since. The position count peaked near 10.25 million shares in late July and has since edged back to around 9.6 million, a modest retreat rather than a capitulation. The borrow market is not particularly tight: availability of roughly 850% means there are about eight-and-a-half shares available to borrow for every one already shorted, leaving ample room for new positions to build without squeezing anyone out. What has changed is the cost of that borrow, which rose 46% on the week to 0.49% — still low in absolute terms, but the direction of travel is notable heading into a print.
Options positioning is slightly more cautious than usual, but not dramatically so. The put/call ratio is running at 0.75, fractionally above its 20-day average of 0.74 and less than one standard deviation from the mean. That puts it in the middle of its 52-week range, which spans from 0.65 at the bullish end to 0.97 at the most defensive. The setup reads as mild hedging rather than active downside positioning — options traders are not pressing the bear case hard ahead of earnings.
The Street's view is harder to read as bullish. Analyst activity has been predominantly negative since June, with Truist downgrading to Sell with a $94 target, Morgan Stanley reinstating with Underweight at $93, and Wells Fargo trimming to $105. The sole constructive move came from JP Morgan on August 4, when Matthew Boss raised his target to $154 while holding a Neutral rating. The consensus target clusters around $128 — roughly 7% above the current $119.55 — but that aggregate conceals a wide dispersion between the bears at $93–$94 and the bulls well above $130. Factor scores reinforce the cautious picture: EPS momentum ranks in the 24th percentile on a 30-day basis and just the 11th percentile over 90 days, analyst recommendation differential scores a bearish 5th percentile, and forward earnings estimates continue to slide. The EV/EBITDA multiple at 5.8x has contracted over the past week and month, reflecting the market's reduced confidence in near-term profitability. The Benzinga case summaries capture the debate bluntly — product issues, a new CEO yet to revise numbers, and international markets softening, particularly China, sit on the bear side; a discounted valuation and brand durability sit on the bull side.
Earnings history adds some context to the setup. The most recent print, on June 4, sent the stock down 9.4% in a single session and it remained down 3.3% five days later. The prior event, in late June, produced a 4% gain and a 4.7% five-day follow-through. The asymmetry — a large down move followed by a smaller up move — reflects the fragility of the current narrative. The stock is now trading at $119.55, down 7% on the week, in a week when peers also struggled: ONON fell 14.2% and AS dropped 10.8%, while WWW bucked the group with an 11% gain. LEVI lost 7.6%, broadly matching LULU's weekly decline, suggesting sector-level pressure rather than a LULU-specific selloff.
The insider picture offers a modest counterpoint: director Chip Bergh bought roughly $500,000 of shares in mid-June near current price levels, the largest insider purchase in the recent window. Net insider activity was positive over the 90-day period, at approximately $3.4 million net bought, though the bulk of that reflects Bergh's single transaction rather than a broad management accumulation. The CFO and president have been net sellers across multiple smaller trades, which tempers the read.
What to watch is whether the new CEO's first earnings commentary in early September narrows the gap between the $93 floor the bears have set and the $154 ceiling JP Morgan is defending — because that's the question the market has been unable to answer for months.
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