Lululemon Edges Out Nike in Profitability but Neither Stock Looks Cheap

Nike's (NKE) first-quarter revenue fell 4% to $11.21 billion, while it guided full-year revenue to decline by a high single-digit percentage.

Lululemon (LULU), on the other hand, closed at $95.86 on October 1 and has lost nearly half its value over twelve months.

Despite selling four times the volume, Nike's profitability is significantly lower than Lululemon's. Lululemon converts 12.78% of revenue into net profit, while Nike manages only 6.70%. The return on equity also favors Lululemon at 30.90%, compared to Nike's 22.14%.

Nike's quarter did show some progress, with earnings coming in at $0.48 a share against the expected $0.43 and gross margin exceeding forecasts. However, its guidance for revenue decline by a high single-digit percentage across fiscal 2027 is a concern.