Lululemon Athletica stock has dropped by almost half this year, contrasting with the market’s 10% gain. Slower sales in North America and China have led to a five-year low. However, business outside of China is gaining traction, potentially boosting revenue and margins.

The U.S. market challenges Lululemon, with slow growth and declining comparable sales. More competition and economic softness have affected its performance, given over 70% of sales are from the U.S. China, once a growth driver, is also showing signs of slowing down.

Lululemon’s lower valuation, trading at 14 times expected future earnings, is a stark contrast to its past multiples. Despite concerns in North America and China, international expansion is showing promise. Revenue in regions outside of China grew 17% in the first quarter of 2025, hinting at a broader growth potential.

The company is expanding in Europe and Asia-Pacific to diversify revenue streams and reduce U.S. market dependency. With strong financials, including high returns on invested capital and equity, Lululemon remains well-positioned for global growth. The stock’s current valuation could present an opportunity for long-term investors.

Read more at Yahoo Finance: Why International Expansion Could Spark a Comeback