Lululemon announced a significant reduction in its full-year guidance and issued a weak outlook for the current quarter, citing 'negative commentary in the media' and underwhelming product launches as key factors impacting its performance. Interim CEO Meghan Frank stated that negative media and social channel commentary affected brand traffic and overall top-line performance, while recent product launches did not generate the expected customer response, despite some successes earlier in the year [1].
Following the announcement, Lululemon's shares dropped nearly 10% in extended trading, and the stock has fallen about 40% year-to-date as of Thursday's close [1]. The company now expects fiscal 2026 sales to be between $11 billion and $11.15 billion, down from the previous range of $11.35 billion to $11.50 billion, and below analyst expectations of $11.48 billion according to LSEG. Earnings guidance was also cut by more than $1 per share, with the new range at $10.95 to $11.15, compared to the prior $12.10 to $12.30 and analyst expectations of $12.30 per share [1].
For the current quarter, Lululemon projects sales between $2.45 billion and $2.48 billion, below the expected $2.60 billion, and earnings per share between $1.76 and $1.81, well under the anticipated $2.68 per share [1]. Despite the weak guidance, Lululemon managed to beat Wall Street expectations for its fiscal first quarter, reporting earnings per share of $1.69 (vs. $1.68 expected) and revenue of $2.47 billion (vs. $2.43 billion expected). Net income for the quarter was $195.0 million, or $1.69 per share, compared to $314.6 million, or $2.60 per share, a year earlier. Sales rose about 4% year-over-year to $2.47 billion, and comparable sales grew 1%, surpassing the expected 0.4% [1].
The company's challenges are most pronounced in the Americas, its largest market, where comparable sales fell 5% during the quarter, marking the fifth consecutive quarter of declines. However, Lululemon continues to see growth in China and other international regions [1].
CONCLUSION
Lululemon's lowered guidance and disappointing outlook have triggered a sharp market reaction, with shares dropping significantly. The company's struggles in the Americas and the impact of negative media coverage and lackluster product launches are weighing heavily on performance, despite modest growth internationally and a slight beat on quarterly expectations.