Lululemon is facing a slowdown in its sales growth in China, a key market that has previously helped offset challenges in its domestic business. The activewear company’s slowing momentum in the region has raised concerns among analysts about its broader growth prospects.

China has been a major driver of Lululemon’s profitability in recent years, supporting the company as sales in its largest North American market have remained flat or declined. The company aggressively expanded in China, opening nearly 50 stores over the past two years and posting double-digit revenue growth. However, recent quarterly results indicated a deceleration, with comparable sales growth in China shrinking to around 5 percent after adjusting for calendar effects, down from stronger gains in previous periods.

This slowdown comes amid increased competition from both international and local rivals. Brands such as Alo and Vuori are rapidly expanding their presence in China, while domestic competitors like Maia Active, owned by Chinese sports conglomerate Anta, are aggressively increasing their store count. Market watchers suggest that Lululemon’s expansion into smaller and less affluent Chinese cities may be reaching saturation, which could be dampening demand.

The company has also dealt with reputational challenges in China. A social media backlash followed allegations of undisclosed “forever chemicals” in Lululemon products, prompting an investigation in Texas and negative online reactions that the company cites as a factor behind the recent performance dip. Another controversy arose when a branded yoga event held on the Great Wall of China featured a Japanese drum during a period of heightened diplomatic tension between China and Japan, leading to further criticism and scrutiny on Chinese social media.

Despite these issues, Lululemon has maintained its full-year revenue growth forecast of 20 percent for China, portraying the current challenges as temporary setbacks. The company plans to continue investing heavily in its China operations, with most of the 25-30 projected international store openings for 2026 scheduled for the Chinese market.

However, some analysts urge caution, suggesting Lululemon should prioritize addressing problems in its U.S. business, which has struggled with quality-control disruptions, inventory challenges, and declining sales. The upcoming appointment of Heidi O’Neill, a former Nike executive, as CEO in September is being closely watched. O’Neill has a reputation as a growth-focused leader, but some experts question whether the company needs to first stabilize its domestic operations before pursuing further expansion.

Lululemon’s shares have fallen more than 50 percent over the past year, nearing an eight-year low, reflecting investor uncertainty about its future prospects. With intensifying competition in China and ongoing challenges at home, analysts say the company’s ability to maintain growth in its key international market will be critical for its overall recovery. The next earnings report and O’Neill’s early leadership moves will be key indicators of whether Lululemon can reverse its recent struggles.