Lululemon (LULU) Hits 8.5-Year Low as Burry Swaps Into Deckers

Lululemon shares fell to $91.28, their lowest in about 8.5 years, after Michael Burry sold the stock for a tax loss and moved the money into Deckers.

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The same day, investor Michael Burry disclosed that he had sold his Lululemon shares to book a capital loss and bought Deckers Outdoor (NYSE: DECK) with the proceeds. He wrote that he is "not throwing in the towel" and "will be back after the wash period."

What Did Michael Burry Actually Do?

Burry sold Lululemon to realize a tax loss and put the cash into Deckers, the owner of the HOKA and UGG brands. He plans to repurchase Lululemon once the wash-sale window ends.

The IRS wash-sale rule bars an investor from deducting a loss if the investor buys a "substantially identical" security within 30 days before or after the sale. Deckers is a different company, so the Lululemon loss can be claimed. The Deckers position also keeps Burry exposed to the premium footwear and apparel sector during the waiting period.

Burry called the two companies "remarkably similar" and said whatever drives a Lululemon recovery should also lift Deckers. He also said the timing is meant to get ahead of a tax-loss selling rush that begins in late October and peaks in early December. That timing would let him rebuy Lululemon in early November, when selling pressure on losing stocks is often still present.

Why Is Lululemon Stock at an 8.5-Year Low?

Lululemon is at a multi-year low because of weak second-quarter results, a second guidance cut and a leadership change. The company reported fiscal second-quarter results on September 3:

• Net revenue fell 4% to $2.4 billion.
• Comparable sales fell 9%, or 10% in constant dollars.
• Americas revenue fell 8%, and Americas comparable sales fell 12%.
• China Mainland revenue rose 4%, but comparable sales fell 2%.
• Diluted earnings per share were $2.92, against $3.10 a year earlier. That figure included $134.5 million in tariff refunds worth $0.86 a share.
• Gross margin rose 200 basis points to 60.5%.

Lululemon now expects fiscal 2026 net revenue of $10.35-$10.50 billion, a decline of 5% to 7%. It guided diluted EPS to $9.48-$9.73. The shares fell sharply after the report, with premarket losses of about 20%. The company bought back 2.7 million shares for $330 million in the quarter.

Heidi O'Neill, a former Nike executive, took over as chief executive in the week after the report, succeeding the interim co-CEOs Meghan Frank and André Maestrini. Her appointment did not reassure investors.

How Does Deckers Compare With Lululemon?

Deckers has held up better, though it is also down in 2026. DECK is down about 23% this year, against a record close of $223.11 on January 30, 2025. HOKA generated $703.5 million of Deckers' roughly $1.02 billion in quarterly sales. Deckers repurchased $338 million of stock last quarter at an average price of $103.79.

Wall Street expects Deckers revenue to grow about 7.4% this fiscal year. For Lululemon, the consensus expects a decline of about 5.8%. Lululemon's average analyst rating is "Hold," with a consensus target near $104.91. Deckers carries a "Buy" consensus with a target near $120.41.

Technical Picture

Burry pointed to a chart pattern in which stocks that break below $100 often slide toward the $60-$80 range. He called this "100 to 75 rule" stronger than most patterns he tracks. LULU broke below $100 in the latest decline. Retail sentiment on Stocktwits moved from bearish to neutral after the trade became public.

What Comes Next for Lululemon Shares?

Three things will shape the stock through year-end: tax-loss selling pressure, O'Neill's first strategic moves, and holiday-quarter sales in the Americas.

Tax-loss selling typically weighs on the year's worst performers from late October through early December. Lululemon is among them. Burry's own sale is a small part of that pressure, but it shows how much investors now treat the stock as a candidate for loss harvesting.

The company's next earnings report, covering the holiday quarter, will be the first full test of O'Neill's turnaround. The key figures will be Americas comparable sales and whether the 60.5% gross margin holds without tariff refunds.

The wash-sale window runs 30 days from the October 5 sale. Burry can repurchase Lululemon in early November without losing his tax deduction.

Outlook

Lululemon is trading near $91 after a full-year revenue decline and a second guidance cut, with a new CEO yet to present a plan. Burry's trade combines a tax-loss harvest with a stated intention to return, and puts Deckers at the center of his sector view for the next month. The window closes in early November, when seasonal tax-loss selling is near its peak.