Quick Market Summary
Lululemon Athletica (NASDAQ: LULU) had a great start to 2025. As of July 2025, the company’s stock was up almost 18% year-to-date, with only steady same-store sales growth and bullish comments from management as the impetus. Moreover, this was not a surprise for anyone that has been following them closely. The June 2024 four-for-one stock split created higher trading volumes — up 45% in the weeks that followed — but the common equity market capitalization is just under $52 billion. Industry analysts projected further upside, forecasting mid-teens EPS growth for fiscal 2025. When saying this, they had the added benefit of recent high-growth – safety first of mind – LULU. Overall, they, LULU, is an issuer of a high-growth name in the activewear space, offering considerable branded equity and great financials.
Potential Positives
- Increased Accessibility: The company’s split shares and lower split price have mildly expanded the retail investor base, allowing price access for smallest accounts to LULU ownership.
- Index Inclusion Benefits: Typically, a company stock split directed a substantial index weighting gain in large mega-cap indices (S&P 500, Russell 1000), attracting passive inflows, thereby increasing liquidity.
- Psychological Upside: Split shares could invigorate financial interests; investors may view the split as a signal of confidence by management in future results.
- Catalysts in 2025: Future product development (e.g., “EverLux” fabric line specific) and international growth opportunities into new Asian markets provide additional growth levers.
Potential Negatives
- No Fundamental Change: Again, the split remains cosmetic; earnings, cash flow, and the underlying economics of the business did not change. The over-focus on the split may lead to unexpected short-term volatility without resulting gain.
- Valuation Pressures: Despite extremely robust growth, the forward P/E (~45×) is still high compared to peers, thus minimal margin for error exists in a scenario where guidance is less than expected.
- Fractional Share Complexity: Retail investors may experience confusion with cash-settlement of fractional shares, thus potentially incurring minor settlement and execution delays or unexpected brokerage fees.
- Market Saturation Risk: As Lululemon further rolls out stores, cannibalization risks will increase within established North American markets.
Company Evolution And Early Milestones (1998–2007)
Since its founding in 1998 by Chip Wilson in Vancouver, Lululemon has evolved from a small yoga-inspired apparel boutique servicing an emerging well-being community, to a publicly traded activewear retailer. The early years were focused on distinguishing products, such as moisture-wicking fabrics and fit. Lululemon worked to create brand loyalty through in-store events. By the mid-2000s the company grew to have a loyal following of “Lululemon devotees” among fitness enthusiasts.
Founding And Private Growth
Lululemon was privately held from 1998 until 2005, the company grew from one to a dozen retail locations across Canada. During this phase, Lululemon perfected its supply chain, investing in proprietary textiles. This important phase set the stage for scalable growth and established a strong community-focused culture.
IPO And Initial Public Offering In July 2007
The company had it’s United States initial public offering on NASDAQ on July 27, 2007 at $18 a share — raising approximately $327 million dollars. The initial public offering financed an aggressive growth plan: building out DTC channels, opening stores and accelerating international growth. Initially trading on public markets resulted in mild volatility but confirmed investors appetites for a premium activewear brand.
Pre-Split Growth Phase (2008–2016)
The ten years following Lululemon’s IPO, was characterized by a steady increase in revenue and market share. While macro headwinds (2008 financial crisis) briefly impacted sales, the loyal customer base and focus on product innovation helped the brand recover quickly.
Revenue And Share-Price Trajectory
From 2008 – 2016, annual revenue grew from $436 million to over $2 billion, resulting in a total share price increase exceeding 400%. Some of the largest factors included the introduction of men’s apparel and the improvements made in digital commerce, which ultimately accounted for 20–25% of the net sales by 2016.
Store Expansion And International Entry
During this time, Lululemon opened more than 200 new stores globally, while also entering into new markets such as Australia, the UK, and China. Each new region provided a more balanced revenue mix and further diversified earnings, providing the brand further resilience against regional economic downturns.
Two-For-One Split Event And Aftermath (2017–2021)
On July 25, 2017, Lululemon announced that it was doing a two-for-one stock split effective August 17, 2017. The trade price dropped with the split from approximately $70 to $35 a share resulting in a significant increase in buying volume.
Basics of Split Mechanism and Reflective Change in Share Count
Existing shareholders received one additional share for each share owned, its outstanding share count then doubled from approximately 60 million shares to approximately 120 million shares. The total market cap remained unchanged post-split but it made the shares more affordable for a larger pool of investors.
Performance Of LULU Post-Split (2017-2021)
In the 12 months post-split, LULU shares increased in value by 28% versus 22% for the S&P-500. We see the volume maintained in the split week increasing approximately 30% from the previous trading week, then returned to a normal level with a higher average. In the following 4 years, the share increased in value more than 3-fold, eventuated by strong SSS sales numbers and expanding international footprint.
Four-For-One Split Event And Immediate Impact (2024–Present)
Following its extremely lucrative 2017, Lululemon announced a split of four-for-one on May 8, 2024 that will take effect on June 10, 2024. This action reaffirmed management’s outlook given record profits and strong guidance for fiscal 2024-2025.
Reasoning for the Split In 2024
In the statement from management outlining its reasoning for the split, Lululemon noted its desire to improve accessibility of its stock even further, and to better align with its long term shareholder strategy. With the pre-split price near $350, the intention was to bring the price levels per share back to the $80-$100 threshold, while continuing to bring in institutional traders as well as retail traders.
Market Reaction and Surge in Volume
Shares rose 4% on the day of the announcement with 50% volume on the next day of trading. Following this announcement, retail brokerage accounts indicated the number of new accounts holding LULU jumped 20%. This indicates the appetite for the stock at a grassroots level is increasing. Moving now into 2025 price action has been buoyant with moderate pullbacks providing tactical opportunities to enter.
Long-Term Performance Metrics (1998–2025)
Lululemon has an impressive compounded annual growth rate (CAGR) since the company’s inception, as it has transitioned from a lifestyle brand focused on the niche of yoga wear to a global athleisure brand.
Total Shareholder Return Over 25 Years
LULU’s total shareholder return (TSR), including dividends and stock splits, is representative of a whopping 1,300%+ from the time of their IPO to July 2025. The corresponding returns of three of the largest apparel peers – Nike (NKE) and Under Armour (UA) – are respectively approximately 400% and 150%. Lululemon added shareholder value by continuing to innovate with their product and brand, while consistently associating with the brand of “community.”
Hedge Fund And Institutional Activity
The inventory position of institutional holders around stock splits provide rich information about particularly professional sentiment and potential upside of LULU’s share price.
Top Institutional Holders By Quarter (2025)
| Institution | Stake (%) Q1 ’25 | Stake (%) Q2 ’25 | Quarter Change |
| BlackRock | 8.5% | 8.3% | –0.2% |
| Vanguard Group | 7.3% | 7.1% | –0.2% |
| T. Rowe Price | 5.6% | 5.4% | –0.2% |
Insider Transactions And CFO Commentary
In April 2025, CFO Meghan Frank sold 25,000 shares, citing portfolio diversification. Simultaneously, she reaffirmed guidance for high-teens revenue growth in fiscal 2025, underscoring management’s bullish stance.
Learned Lessons For Investors
History provides solid lessons on ways to capitalize on the opportunities available with splits and avoid the dangers.
Timing Of Investment
Traders that are reactive often just chase the spikes in price that results directly from the stock split announcement, whereas, the more strategic investor may be more likely to build a position in advance of the announcement to take advantage of the price run-up. Insider buying, and monitoring sell-side research can usually help one establish a timing for their entry.
Liquidity And Trading Volume
For most schemes, there will still be a high volume post-split that creates tighter bid-ask spreads from high trading volume for the purposes of making a more efficient execution. However, after a few weeks of splits, there can be false breakouts as trading volume normalizes.
Long-Term Growth
Splitting stock won’t enhance earnings; it merely changes the number of shares circulating in the market. Value comes from developing different revenue streams, growing profit margin, and developing sustainable development practices – all areas that LULU has exceeded expectations historically.
FAQ
What Is A Stock Split?
A stock split is a corporate action that increases the number of shares outstanding while decreasing the price proportionally compliant with market cap.
Why Did Lululemon Announce Split?
Announcing a stock split, the company was looking to increase liquidity, broaden retail access, and communicate positivity on the company’s long-term growth prospect.
How Will Share Counts Be Changed?
In June 2024, for example, shareholders received four shares for each share that they owned as a result of the split, or now four times the number of previous shares.
Are There Any Tax Implications?
A company’s split does not create any immediate tax event. Adjusted basis will be adjusted proportionately. Tax advice should always be sought from a tax advisor.
Are There Future Splits Possible?
Management has not confirmed if there will be future splits, but if the price per share continues to appreciate on the balance sheet, the company may do a stock split again in the future.
Full Press Release
For a full press release please refer to the Lululemon press release from June 10, 2024 and signing-related SEC periodic filing forms on 8-K.
Forward-Looking Statements
Management makes certain projections about future events, and certain forward-looking language, which is subject to risks and uncertainties. Actual results may differ materially due to market factors, competitive factors affecting our business, global economic conditions, and other factors.