Lululemon Just Cut Its Forecast for the Second Time This Year

Lululemon cuts full-year forecast guidance for the second time this year. The move deepens concerns about the athletic-wear retailer’s turnaround, just as a new chief executive settles into the job.

The company’s second-quarter results showed revenue declining 4% to $2.4 billion. Comparable sales fell 9% from the same period last year. Shares dropped 18% on the news, extending a rough stretch for a brand that once defined premium athletic wear.

Why Lululemon Cuts Full-Year Forecast a Second Time

Lululemon had already trimmed guidance once earlier in 2026. This second cut reflects weaker demand and pricing pressure. The company had hoped a product refresh would offset both. It did not.

Executives pointed to softer North American traffic and heavier promotional activity across the category. Both weighed on the quarter. That combination has squeezed margins across the sector, not just at Lululemon.

The Numbers Behind the Guidance Cut

For fiscal 2026, Lululemon now targets full-year revenue of $10.35 billion to $10.5 billion. That implies a 5% to 7% contraction versus last year. It sits well below the $11 billion to $11.15 billion range the company had previously projected. Earnings guidance fell alongside it, to $9.48 to $9.73 per share, down from an earlier $10.95 to $11.15.

The gap between the two guidance ranges is wide enough that some analysts now question the company’s internal forecasting process, not just its product strategy. Missing a full-year target by roughly $600 million in one fiscal year suggests demand shifted faster than planning could absorb.

A New CEO Walks Into a Turnaround Fight

Incoming chief executive Heidi O’Neill, a Nike veteran, started the role on September 8. She arrived just as the company delivered its weakest guidance of the year. Her mandate centers on reversing the sales slide without further eroding the brand’s premium positioning. That balance has proven difficult for legacy athletic-wear retailers in a crowded, price-sensitive market.

How Investors and Analysts Reacted

The 18% single-day stock drop reflected investor frustration with a second consecutive downgrade, more than surprise at any single number. Analysts have flagged declining comparable sales as the more troubling signal. It points to weakening demand among existing customers, not just softer new-store growth.

How Lululemon Got Here

Lululemon spent much of the past decade as the standout growth story in athletic apparel. It expanded well beyond its yoga-wear roots into a broader lifestyle brand with a loyal, high-spending customer base. That momentum slipped over the past two years as larger rivals launched competing lines at lower prices. That squeezed the premium positioning that once let Lululemon charge more without losing customers.

Company leadership has acknowledged internally that its product pipeline moved too slowly to respond. Closing that gap is O’Neill’s specific mandate.

Competitors Are Closing the Gap Fast

Lululemon built its early lead on a small handful of signature products, like its original leggings line. Rivals have spent the past three years copying that playbook. Alo Yoga, Vuori and several fast-fashion athletic brands now offer similar fabrics at lower price points. Each has taken visible market share in North America over the past two years.

Industry analysts say Lululemon’s brand still commands loyalty among its core customers. But that loyalty has not been enough to offset a broader slowdown in discretionary apparel spending. Shoppers trading down to cheaper alternatives has hit premium athletic wear across the board, not just Lululemon specifically.

Store Footprint and International Growth

Lululemon has leaned on international expansion, particularly in China, to offset North American softness in recent years. That strategy delivered strong results through 2024 and early 2025. Growth in Chinese consumer spending on premium apparel has since cooled, narrowing one of the company’s most reliable growth levers.

The company has not announced store closures tied to this guidance cut. But executives have signaled a slower pace of new store openings in North America through the rest of fiscal 2026, redirecting capital toward product development instead.

What Lululemon Needs to Prove From Here

O’Neill’s early priorities include stabilizing North American comparable sales and defending margins against markdown pressure. Investors will watch the next earnings report closely for any sign the September cut marks a floor, not another step down.

Whether international markets can grow fast enough to offset North American softness remains an open question heading into the next earnings call. So is how quickly O’Neill’s team can refresh the product lineup without repeating this year’s missteps.

Fast Answers on Lululemon’s Guidance Cut

Why did Lululemon cut its full-year forecast?

Second-quarter revenue fell 4% to $2.4 billion and comparable sales dropped 9%, prompting the company to lower guidance for the second time in 2026.

How much did the stock fall?

Shares dropped 18% following the announcement.

What is the new full-year guidance?

Lululemon now targets $10.35 billion to $10.5 billion in revenue, down from an earlier forecast of $11 billion to $11.15 billion.

Who is running the company now?

Incoming CEO Heidi O’Neill, a Nike veteran, started the role on September 8, 2026.

Is this the first forecast cut this year?

No, it is the second reduction to Lululemon’s full-year outlook in 2026.

Sources

• Yahoo Finance — Lululemon (LULU) cuts its outlook again just as a new CEO walks through the door. https://finance.yahoo.com/markets/stocks/articles/lululemon-lulu-cuts-outlook-again-164209283.html
• Quartz — Lululemon cuts full-year forecast again after Q2 2026 earnings miss. https://qz.com/lululemon-annual-forecast-cut-second-quarter-earnings-090426

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