LULULEMON (-) : The Great Wall of Trouble

Research evidence excerpt

LULULEMON (-) : The Great Wall of Trouble

EQUITIES

GENERAL RETAIL

LULULEMON UNDERPERFORMPRICE* USD111.8  TARGET PRICE USD88 (DOWNSIDE 21%)

FLASH NOTE

The Great Wall of Trouble

22 JUNE 2026 Securities Research Report Production time: 12:51* (London time)

Research Analyst & Publishing Entities

Laurent Vasilescu BNP Paribas Securities Corp (1) (+1) 212 634 4971 Laurent.Vasilescu@us.bnpparibas.com

What happened?

Lululemon is drumming up trouble with social media backlash in China after hosting a yoga event at the Great Wall

near Beijing on May 30. This is the second controversy faced by Lululemon in China within a quarter. There are

significant earnings implications as we foresee China growth stalling out and we are 30% below consensus for FY27

EPS.

BNPP View:

Near Term Impact on 2Q26 results: During the May 30 yoga event where over 2,000 participants attended, Lululemon

used a traditional Japanese taiko drum instead of a traditional dagu drum. There are cultural sensitivities with using the

Japanese drum especially at the historic Chinese UNESCO site. As result of the controversy, there were over 50 million

views discussing the Japanese taiko drum on Weibo (see link). We find it interesting that Lululemon did not comment

about this controversy during the 1Q earnings call held on June 4th. The Western media only picked up on the

controversy late last week after Lululemon issued an apology for the misstep. This is not the first time this year that

Lululemon encountered backlash in Mainland China. In April there was a fair amount of pushback in China during the

forever chemicals (PFAS) controversy discussed on the 1Q26 earnings call.

Over the years we have seen Western brands get into the crosshairs of political sensitivities in China. This includes