Lululemon shares tumble as Cramer warns of falling estimates
Jim Cramer notes the stock trades at roughly 10 times earnings, down from historic highs, but cautions that cheap valuations are insufficient while guidance remains dismal.
Lululemon Athletica Inc. (NASDAQ: LULU) shares fell more than 8 per cent following a disappointing quarterly report, prompting scrutiny from financial commentators on 10 June 2026. Jim Cramer, speaking on Mad Money, characterised the company’s latest results as another miss in a series of underwhelming quarters, noting that the stock was “crushed” by the market reaction.
The decline was driven by a combination of dismal forward guidance and intensifying competition within the athleisure sector. While sales and earnings slightly exceeded expectations, the broader context revealed a shift in consumer behaviour post-pandemic. Cramer observed that while athletic wear had become a “uniform” during the COVID-19 era, the trend may have appeared more durable than it actually was, with shoppers increasingly opting for cheaper alternatives to premium brands.
Valuation metrics have compressed significantly as a result. The stock now trades at approximately 10 times this year’s earnings estimates, a stark contrast to its “glory days” when it commanded multiples of 30 times earnings or higher. Cramer highlighted that the market no longer pays a premium for non-growth, suggesting that the company’s previous uniqueness has been eroded as numerous competitors now produce trendy workout apparel and performance clothing.
Despite the brand’s strength, Cramer argued that Lululemon is not comparable to luxury houses like Louis Vuitton, where brand loyalty can sustain pricing power regardless of cost. He noted that if consumers can source similar products elsewhere for less money, they will do so, a dynamic clearly reflected in the company’s recent numbers and guidance.
Looking ahead, Cramer suggested the stock could become “interesting” if the business manages a turnaround, but he cautioned that cheap valuations alone are insufficient. With earnings estimates continuing to fall, he described the stock as acting like a “falling knife,” indicating that investors should wait for clearer signs of stability before considering an entry.
