Nike vs. Lululemon: Which Stock Is a Better Buy for the Last 2 Months of 2026?
One just showed a real sign its turnaround is working, while the other's earnings beat hid a weaker underlying story.
In the final two months of 2026, investors face a decision between Nike (NKE) and Lululemon Athletica (LULU), two major athletic apparel companies that have experienced significant declines in 2026. Both companies have reported shrinking sales, cut guidance, and declining stock prices.
Nike reported a 4% drop in fiscal first-quarter revenue to $11.21 billion, missing estimates, and a 26% decline in Greater China sales for a ninth consecutive quarter. The company guided to a high-single-digit revenue drop for the full fiscal year and adjusted earnings guidance of $1.15 to $1.35 a share, which is below consensus.
Despite these challenges, Nike's gross margin expanded by 60 basis points to 42.8%, driven by lower warehousing and logistics costs. CEO Elliott Hill has implemented a restructuring plan called "Pace," targeting $2.5 billion in savings through fiscal 2031, which includes $1 billion in pretax charges.
Lululemon, on the other hand, reported a 4% drop in second-quarter revenue to $2.4 billion, with comparable sales falling 9%. The company also revised its full-year EPS guidance downward from $10.95 to $11.15 to $9.48 to $9.73. Lululemon's North American revenue fell 8%, and leggings sales, a key product category, dropped 20%. While the adjusted EPS beat most analyst expectations, the headline number was inflated by a tariff refund and an interest benefit.
Moreover, Lululemon recently underwent a leadership change with the appointment of Heidi O'Neill as CEO during a period of weakness in its core product line.
Despite both companies offering promising products, investors should lean towards Nike for the last two months of 2026. Nike's margin expansion is a genuine signal, not just an accounting footnote, and its restructuring plan includes specific numbers rather than vague promises. Additionally, Nike has a global footprint, providing more opportunities to offset weak regions with strong ones.
While Lululemon's new CEO may bring change, buying into a management transition during a 9% comparable sales decline and a beat driven by one-time items is riskier. Nike's stronger performance and clearer path to improvement make it the better choice for investors looking to capitalize on the final two months of 2026.
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