10:56 AM EST, 12/12/2025 (MT Newswires) -- Lululemon Athletica ( LULU ) could see pressure on fiscal 2026 margins from tariffs and product markdowns, BofA Securities said in a Friday note.

The company reported fiscal Q3 earnings late Thursday of $2.59 per diluted share, down from $2.87 a year earlier, while revenue rose to $2.57 billion from $2.40 billion. Lululemon also raised its fiscal 2025 outlook and said Calvin McDonald will step down as chief executive officer, effective Jan. 31, 2026.

BofA Securities said the 25% fiscal Q3 comparable sales growth in China offset the softer comparable sales in the US.

The company was positive over its Thanksgiving week's performance, clearing excess inventory, the investment firm noted. However, sales have slowed since, leading to "a slightly lower 4Q revenue plan," more markdowns, and higher costs to drive traffic, BofA Securities added.

The investment firm said the upcoming new leadership could bring in new strategies to stabilize sales, but a turnaround "will take time."

BofA Securities raised its price target for Lululemon Athletica ( LULU ) to $220 from $185, while maintaining a neutral rating.

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