Lululemon sales are being squeezed — but it’s hoping sports sponsorships will save its skin

For almost two decades, Lululemon was the first and last word in luxury athleisure. Now, it’s the very last name in the S&P 500: LULU stock sank more than 18% on Friday, confirming it as the worst performer in the entire index this year so far, down 56%.

Indeed, having notched just 1% sales growth in the US and Canada in its second quarter, as well as slashing its full-year guidance, the apparel maker appears to have hit a wall in its primary market.

Though the company cited tariffs as one reason why its margins have been under pressure — and said the official ending of the de minimis exemption on August 29 is likely to hurt its Canada-to-US supply chain even more — Lululemon has a more fundamental issue: falling out of fashion, just as its competition hits its stride.

In the future, that might mean spending a lot more on marketing. As reported by The Economist, the company currently spends only ~5% of revenues on marketing, while competitors Alo Yoga, Vuori, and On have been shelling out for big-name celebrities.

Realigning chakras

Perhaps recognizing the threat, Lululemon has been turning to sports influencer advertising as part of a larger marketing shift, announcing partnerships with F1 champion Lewis Hamilton, tennis player Frances Tiafoe, and golfer Max Homa this year.

While female sports stars like Leylah Fernandez have been signed as Lulu ambassadors in years past, this year’s roster comprises solely male athletes. This could suggest an intentional effort to continue growing its menswear category — which notched total sales of $625 million in the second quarter (up 6% year on year) — as the brand attempts to stretch its reputation further away from $100-plus yoga pants.