Lululemon Cuts Forecast; Shares Drop Nearly 9%

Lululemon on Friday narrowed its full-year revenue and earnings guidance and forecast flat to slightly lower sales for the year, sending the stock down about 9% in early trading.

The company now expects full-year revenue of $11.0 billion to $11.15 billion, a decline of about 1% to flat, versus prior guidance of 2% to 4% growth. Annual earnings per share were revised to $10.95 to $11.15, down from $12.10 to $12.30. For the current quarter the retailer projected revenue of $2.45 billion to $2.48 billion and EPS of $1.76 to $1.81, both below Wall Street estimates.

Management attributed the weaker outlook to stepped-up discounting, a refreshed product assortment, adjusted marketing strategies and margin pressure from higher tariffs. Meghan Frank, chief financial officer and interim co-CEO, told analysts the brand’s image “took a beating in the media and on social channels recently” and that weaker consumer traffic has weighed on sales.

Frank added that some recent product launches did not drive broader buying across the assortment. “These styles were met with good guest response, but so far, the campaign hasn’t had the expected halo effect on other areas of our assortment,” she told analysts. She also said the company is taking rapid actions to address performance and is “moving with urgency to make the necessary adjustments to re-accelerate momentum, particularly in North America.”

Lululemon’s shares have fallen nearly 65% over the past 12 months. Analysts responded to the guidance cut with caution. Barclays analysts described the company as entering a “trap” phase with deteriorating fundamentals and weaker pricing power. Jefferies analyst Randal Konik pointed to worsening U.S. sales trends and declining store productivity. William Blair flagged negative social commentary and underperforming launches as drivers for weaker comparable sales and heavier markdowns through the second quarter, and said 2027 could be another transition year given the leadership timeline.

Oppenheimer analysts Brian Nagel and Andrew Chasanoff said they remain constructive on the Lululemon brand but warned the company risks stagnation as smaller competitors gain share. They noted that Heidi O’Neill, the former Nike executive scheduled to become CEO in September, is constrained by a non-compete that delays her start and could push major product initiatives into 2028.

The company is currently led by Frank and President and Chief Commercial Officer André Maestrini after former CEO Calvin McDonald departed earlier this year. Lululemon recently reached a settlement with founder Chip Wilson under which Wilson will nominate two directors, the board will add a third director with apparel and brand expertise, and Wilson agreed to suspend his campaign and refrain from public criticism for 18 months.

Lululemon said it will increase promotional activity and adjust inventory and marketing to try to boost traffic and sales, and acknowledged those actions will put near-term pressure on profit margins.