LULU Q2 Results Are In — Bears Trim, But Pressure Lingers

lululemon athletica reports Q2 earnings on September 3, the day after this note — and the short positioning that dominated last week's setup has already begun to unwind, even before a single number drops.

The shift in short interest is the clearest change from Friday's pre-earnings note. Bears had pushed short interest to a six-month high of roughly 10.2% of the free float heading into the print. By September 1, that had eased to 9.7% of float — an 8.5% week-on-week decline in shares short, with the sharpest single-day reduction coming on September 1 itself, when shorts trimmed 4.4% in one session. The absolute level remains elevated versus mid-August, when SI was closer to 8.6%, but the direction has flipped. Short sellers built aggressively into the event; they are now, at the margin, pulling back. The ORTEX short score has followed: it peaked at 55.4 last week and has dropped to 52.8, retreating from its recent high though still sitting in moderate bear territory.

The borrow market reinforces the trimming story rather than contradicting it. Availability — the ratio of shares still available to lend against those already borrowed — has jumped to 575%, up sharply from 434% at the end of August and back near the 575% level seen in mid-August before the big build began. Cost to borrow has more than halved over the week, falling from roughly 0.48% to 0.25%, the lowest in over a month. Both moves point the same direction: demand for borrows eased fast, and the lending pool is comfortably supplied. Options are close to neutral — the put/call ratio at 0.76 is fractionally above its 20-day average of 0.75 and about one standard deviation from that mean, nowhere near the defensive extreme of 0.97 seen at the 52-week high.

The Street's posture is cautious rather than bearish outright, but the direction of travel on analyst targets has been consistently lower. UBS trimmed its target to $120 last week, maintaining Neutral — that move is notable because $120 is now below the current price of $118, effectively a mild negative call while avoiding a formal downgrade. Earlier in the summer, Morgan Stanley reinstated coverage at Underweight with a $93 target, and Truist downgraded to Sell with a $94 objective. The consensus mean target of $127 implies modest upside from here, but that figure is dragged higher by JPMorgan's $154 Neutral target — a target that sits far above where most peers have settled. On valuation, the trailing P/E has compressed to 10.4x, down about 0.5 turns over the past week, and EV/EBITDA at 5.6x reflects a stock the market is pricing for stagnation rather than recovery. EPS momentum factor scores of 29 (30-day) and 11 (90-day) confirm the earnings revision cycle is still running negative.

The bull case rests on a resumption of EPS growth and international optionality, particularly if China stabilises. The bear case — leadership transition uncertainty, North America deceleration, margin compression from markdowns — has more active voices behind it right now, with multiple firms holding sub-$100 targets that imply further downside from $118. Founder Dennis J. Wilson remains the most notable name on the register, holding approximately 8.4% of shares outstanding via Schedule 13D filings (the most recent amendment dated August 3, 2026). His stake is unchanged from prior filings. As always with 13D/G disclosures, positions are as-last-disclosed around the 5% threshold, and holders dropping below that level may not file again.

What to watch now is the price reaction to the Q2 print itself: the last comparable earnings event — June 4's Q1 release — produced a 9.4% single-day decline and a further 3.3% over the following five sessions, and short interest was sitting at 6.3% of float at that point, significantly below today's level even after the recent trimming.