Lululemon (LULU) earnings Q1 2026
lululemon‘s troubles are not over.
The athletic apparel retailer cut its full-year forecast and issued a weak current-quarter outlook on Thursday, with interim CEO Meghan Frank citing undisclosed “headwinds.”
“We are dealing with headwinds that have led us to change our outlook for the full year,” Frank said in a news release. “We have evaluated the business and are taking additional steps where necessary to reposition and further strengthen our product engine. We are confident in our path forward.”
Following the report, the company’s shares fell nearly 10% in extended trading. Lululemon’s shares are down nearly 40% this year as of Thursday’s close.
Lululemon expects fiscal 2026 sales to be between $11 billion and $11.15 billion, compared to its previous range of $11.35 billion to $11.50 billion. Analysts expected full-year sales of $11.48 billion, according to LSEG.
Lululemon also cut its earnings forecast by more than $1 per share. It now expects earnings per share to be in the range of $10.95 to $11.15 for the year, down from a range of $12.10 to $12.30. Analysts were expecting $12.30 per share, according to LSEG.
The current quarter is not looking good. Lululemon expects sales to be between $2.45 billion and $2.48 billion, below expectations of $2.60 billion, according to LSEG. Earnings per share are expected to be between $1.76 and $1.81, according to LSEG, well below expectations of $2.68.
While Lululemon’s guidance failed to meet estimates, it beat expectations on the top and bottom lines for the fiscal first quarter, despite expectations falling significantly since the retailer last reported earnings. Here’s how the company is performing compared to Wall Street’s expectations, according to a survey of analysts conducted by LSEG:
- Earnings per share: $1.69 instead of the expected $1.68
- Revenues: 2.43 billion dollars is expected against the expectation of 2.47 billion dollars
The company’s reported net income for the three months ended May 3 was $195.0 million, or $1.69 per share, compared to $314.6 million, or $2.60 per share, a year earlier.
Sales rose nearly 4% to $2.47 billion from $2.37 billion a year earlier. Comparable sales rose 1%, above expectations of 0.4%, according to LSEG.
Lululemon’s troubles are concentrated in America, its largest and most important region. During the quarter, comparable sales in the market fell 5%, marking the fifth consecutive quarter of decline. Lululemon’s overall business is still growing, but that growth has been seen primarily in China and other international regions, which account for a small portion of total revenue.
Sales were a pain point for Lululemon, but profitability was an even bigger challenge. The company was a big beneficiary of the now-repealed de minimis exemption that allowed it to ship packages duty-free across the Canadian border to the U.S., and it was also hit hard by tariffs.
With fewer people coming to its stores and website to buy activewear, the company turned more to discounts to boost sales, hurting its profitability and reputation as a premium brand. Full-priced sales in North America increased from the previous quarter, a “positive” signal for the business, Frank said in a statement.
It has also spent the past six months engaged in a dramatic proxy race with its founder, which proved costly and distracted management from its turnaround.
On top of all these struggles, Lululemon, like everyone else, also had to deal with a new conflict in the Middle East and rising gas prices that drove up costs.
In the three months since Lululemon last reported earnings, there has been some progress in overcoming some of its challenges. It hired longtime Nike veteran Heidi O’Neill as its next CEO, settling a proxy battle with its founder. Investors will likely be relieved that Lululemon’s management team will no longer have to focus on the succession race and give up its money, but some are still upset about O’Neill’s appointment, especially since it won’t start until September.
Under the direction of two interim CEOs, CFO Frank and Chief Commercial Officer André Maestrini, Lululemon is working to rebuild its product mix and address its domestic growth challenge. But real strategy changes won’t happen until O’Neill starts.
Considering how long it took for Lululemon to go from product idea to market, there are concerns that it will take longer than expected to resolve the challenges plaguing its business.
Still, Lululemon maintained that O’Neill was the right person for the job. While at Nike, O’Neill founded and grew Nike’s women’s division and turned it into a multibillion-dollar franchise. He also worked to shorten product delivery times, an experience that would serve him well as Lululemon’s chief executive.
