Performance Sport Meets Reality: ONON, Nike, Lululemon and the New Consumer Cycle
Three elite brands, one slowing shopper, rising tariffs, and a technical tape that finally matters again
Sportswear used to be a simple story. Global consumer growth. Athleisure adoption. Direct to consumer expansion. Slap a premium multiple on it and move on. That’s not the market we’re in anymore. Right now we have a very different setup: a cautious consumer in North America, higher tariff friction on product coming from Asia, wholesale partners that are pushing back, and investors who are no longer willing to pay 30 to 40 times earnings for decelerating growth. That’s why names that used to trade like luxury are suddenly trading like ordinary retailers. Think Lululemon’s LULU 0.00%↑ guide down on tariffs and slower US demand. Think Nike’s NKE 0.00%↑ revenue slipping 9 percent year on year with margins under pressure. Think On Holding ONON 0.00%↑ still growing fast but about to face a tougher comparison period and a market that wants proof, not promises.
Key takeaways
This is no longer an everything wins sector. You have to separate who can grow without heavy discounting from who cannot.
Margins are the battleground. Nike is defending. Lululemon is paying tariffs. On is still expanding but has to prove it can do it again in Q3.
Earnings dates are important this quarter because guidance will tell us how much of the tariff pressure can be offset with pricing or mix.
Technicals say respect the trend. None of the three is in a confirmed uptrend on the higher daily time frame. That means entries matter more than usual.
Valuation will favor whoever can show steady double digit revenue growth in a slowing consumer environment. Right now On has the best shot at that.
If the macro backdrop weakens or the dollar stays firm, international growth for Nike and Lululemon becomes harder to translate into earnings.
Pipelines and environment
Let’s set the scene.
Demand pipeline. US discretionary demand is soft and selective. Consumers are still buying performance, still buying innovation, still buying true lifestyle pieces, but they are not buying at any price. That hits Nike in wholesale and in North America. It hits Lululemon in US women’s and in newer categories where the product isn’t yet must have. It is less visible in On because the brand is earlier on its penetration curve, but even there investors will watch Nov 11 very closely to see if the premium running story is intact. Earnings dates matter here because all three will be reporting inside a fairly noisy holiday and tariff backdrop. ONON Nov 11 2025, LULU Dec 4 2025, NKE Dec 18 2025.
Cost and tariff pipeline. Lululemon has already told us tariffs are a direct drag on gross margin and on the full year guide. That is exactly what you worry about when a premium brand loses a bit of pricing power at the same time. Nike is seeing something similar through mix and higher discounts. On is better positioned for now but cannot ignore a world where shipping and sourcing get more expensive.
Channel environment. Direct to consumer is still the long term answer because it protects price, data and brand. But the market is clearly saying that DTC growth has to be profitable growth. Nike’s gross margin slid to a little above 42 percent, down a few hundred basis points from peak levels, because the company had to clear product and because channel mix wasn’t as rich as planned. Retailers are not begging for incremental inventory like they did in 2021.
Macro overlay. Rates have stayed restrictive long enough to matter. A still strong US dollar keeps pressure on companies that sell in EM and report in USD. And we have a consumer that is watching employment data far more closely than in 2023. None of this is catastrophic. It’s simply unfriendly for high multiple apparel names.
Fundamental analysis
NKE 0.00%↑ is still the benchmark. Fiscal 2025 revenue was down about 9 percent year on year in the quarter the company last reported, which is not what you want to see from the global category leader. The pressure came from wholesale and from Converse. Gross margin fell into the low 40s because of discounts and channel mix. That margin line used to have a 4 handle in front of it with room to expand. Now it is in defend mode. On the positive side, Nike still has scale, still has the deepest product engine, still has DTC, and still has a balance sheet that can buy time for the turnaround. The real message is valuation. If earnings per share are down almost by half for the year but the stock is already 30 plus percent off the highs, then part of that damage is priced in. This is why we’ve been saying for months that Nike does not need perfection, it just needs the pace of negative revisions to slow.
LULU 0.00%↑ is the purest premium growth story in the group but also the one most directly hit by today’s tariff regime. Management cut revenue to roughly 10.85 to 11.0 billion and earnings to the high 12s to low 13s because tariffs and softer US demand took away some of the upside. That was the second downward revision in the same year. When a market that already watched the stock fall more than 50 percent sees a second guide down, it stops paying a luxury multiple. The good news is that international, especially China, is still growing well. The brand is intact. The customer is not walking away. What changed is the cost to get that growth. That makes positioning and timing more important than it used to be.
ONON 0.00%↑ is the youngest of the three and still putting up the best top line growth. Revenue is above 2.3 billion and was up more than 25 to 30 percent on a trailing basis. Margins are good for a company at this stage, with a TTM net margin in the low double digits and the business still reinvesting in product and stores. That’s rare in this space. What investors will watch in November is whether growth can stay above 20 percent once the brand gets deeper into North America and once the easy comps roll off. If it can, then it deserves to trade at a premium to Nike and Lulu. If it cannot, the stock will get pulled back toward footwear peers that trade on earnings, not stories.
Industry view
All three sit inside the global athletic and performance apparel space. This is a structurally attractive industry because it is tied to health, running, fitness, and lifestyle. It is also crowded. Adidas, Puma, New Balance, Deckers, emerging premium brands, yoga and studio names, plus the private label activity of large retailers. The fight right now is for full price sell through. Tariffs and a slower US consumer make that fight harder. Inventories across the channel are better than in the 2022 hangover but they’re not lean enough to let brands raise price aggressively. That is why we are seeing more promotions. A sector that once expanded gross margin year after year is now defending it.
Technical analysis
We have three slightly different charts but one message. Price respects moving averages again.
Nike is trading under the 20, 50, 100 and 200 day EMAs on the daily setup, with RSI sitting in the low 30s. MACD has already rolled down. That is a textbook definition of a downtrend that is trying to base around a major Fibonacci area. The daily fib cluster near 62 to 63 dollars is the first serious support. Below that sits the 1.272 to 1.618 extension in the high 50s. Bulls need the stock back over the 50 day quickly to change the tone.
Lululemon has already done the large time frame damage. Weekly EMAs are all above price. RSI has been building a floor near 30 to 35. Daily fibs show a clear 166 to 169 retracement zone that just got retested. If that holds, the next magnet is 175 to 180 which aligns with the 0.618 area on the daily extensions. Above 180 you can start talking 190 to 200. Lose 166 on volume and you open 156 then 149 which is where the 1.618 sits.
On Holding sold off sharply into the high 30s. Weekly RSI is near 30 which is where this stock has bounced before. Daily fibs show 37 to 38 as the first reaction zone, 40 to 41 as the first resistance band, and then 44 to 47 as the bigger reclaim. Because ONON is still in a long term up channel on the higher time frame, buyers will look for reversal candles near earnings. Until that happens, it is a falling knife and we don’t guess the bottom.
A simple trade approach that is risk averse and strategic
Here’s a way to participate without getting chopped up.
Nike
Idea. Accumulate on weakness into 62 to 64 with a stop under the 1.272 extension cluster around 58.
Trigger. Daily close back above the 20 day EMA or a strong candle after Dec 18 earnings.
Target. 70 first, 73 to 75 stretch which is where the 200 day lives.
Logic. You are paying for a re rating from bad to less bad while holding a world class brand.
Lululemon
Idea. Trade the range. Buy near 166 to 170. Stop under 156.
Target. 180 first, 190 second.
Logic. Tariffs and guides are known. Stock already repriced. You let the chart tell you if demand is returning.
On Holding
Idea. Starter position only before Nov 11. Add only if the print confirms growth above 20 percent and the stock reclaims 40 to 41.
Risk. Stop under 35.
Target. 45 to 47 which is the big fib cluster and where moving averages start to converge.
Logic. You are paying for the right tail of a young premium brand, so you size smaller, you scale in, and you demand confirmation.
Bottom line
We have a good industry going through a normal downcycle at the same time as costs and tariffs are going up. That is why results from very good companies suddenly look ordinary. In this kind of tape, the winners are the investors who act like operators. They focus on price levels, not headlines. They size according to volatility, not excitement. And they let the earnings calendar do the heavy lifting. If you keep the framework above in mind, you can own the brands people love without paying prices the market no longer wants to support.
This content is for informational and educational purposes only and is not financial advice.