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Lululemon Issues Weaker Outlook. What It Means for the Stock - Barron’s
By Janet H. Cho
https://www.barrons.com/articles/lululemon-earnings-stock-price-f6b84bda
Updated June 04, 2026 5:32 pm EDT / Original June 04, 2026 4:29 pm EDT
\- Lululemon’s first-quarter sales rose 4% to $2.5 billion, exceeding estimates, with adjusted earnings of $1.69 a share.
\- First-quarter net revenue increased 4%, driven by a 22% international gain, with gross margin decreasing to 54.2%.
\- The company issued a weaker full-year outlook, projecting revenue of $11 billion to $11.15 billion, causing shares to drop over 8%.
Lululemon Athletica reported better-than-expected first-quarter results but a weaker outlook for the second quarter and the full year, sending its shares lower in after-hours trading.
Shares of Lululemon were down more than 10% after closing down 0.9% at $124.92 in regular trading. The stock is down nearly 40% through Thursday’s close and down nearly 52% over the past 12 months.
The specialty athleticwear, footwear, and accessories company said sales for the fiscal quarter ended May 3 rose 4% to $2.5 billion, above the $2.43 billion Wall Street was estimating.
Adjusted earnings $1.69 a share were slightly above the $1.68 a share expected, but below the $2.60 per share in the year-ago quarter, according to FactSet.
Interim Co-CEO and Chief Financial Officer Meghan Frank called it “a solid start to 2026,” saying that “Our work to drive improvements in North America resulted in some positive signals in the quarter, including a sequential improvement in full-price sales.
“More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year,” including negative commentary, and product launches that weren’t as successful as anticipated, Frank said. “We have assessed the business and are taking additional actions to reposition where needed and further strengthen our product engine. We remain confident in our path forward.”
Lululemon announced in April that longtime Nike veteran Heidi O’Neill would be its new chief executive, starting Sept. 8.
Net revenue increased 4% during the quarter, but fell 4% in the U.S. and declined 3% in Canada, while increasing 30% in China and 13% in the rest of the world. Sales in China were boosted by the timing of Chinese New Year and recent promotions including more than 2,000 people practicing yoga on the Great Wall in Beijing.
Sales at stores open at least a year grew 1%, above the 0.2% decline analysts expected. But comparable sales declined 5% in the Americas, grew 20% in China, and rose 5% in the rest of the world.
Gross profit declined 3% during the quarter, to $1.3 billion, while gross margin decreased to 54.2%, from 58.3% in the year-ago first quarter.
For the full fiscal year ending in January 2027, Lululemon said it expects net revenue in the range of $11 billion to $11.15 billion, a decline of 1% to 0%. It projects earnings of $10.95 to $11.15 a share.
Analysts were forecasting full-year revenue of $11.47 billion and adjusted earnings of $12.27 a share.
Lululemon opened five net new company-operated stores during the quarter, ending with 816 stores. Analysts had expected 830 stores.
Lululemon has faced a number of recent challenges, including lackluster guidance, see-through leggings scandals, and accusations that its products contain toxic chemicals, which the company says is not true.
Founder Dennis J. “Chip” Wilson, then a vocal critic of management, launched a proxy battle against the company in late 2025, arguing that the board and the company’s strategy needed substantial changes, Barron’s has reported.
Lululemon said at the time that it had engaged “extensively and in good faith” with Wilson. But in late May, in its first major pushback against Wilson, Lululemon published a letter saying he has “outdated perspectives” about the company’s future and urging shareholders to reject his nominees to the board of directors.
“His actions have been damaging to the brand and harming the very stakeholders he claims to represent: shareholders, guests, and employees,” the board said.
On May 27, Lululemon announced a cooperative agreement with Wilson, who owns about 8.7% of the company’s stock. It said Laura Gentile, former chief marketing officer of ESPN, and Marc Maurer, former co-CEO of On, would join the company’s board after its 2026 shareholders meeting on June 25, and that it would appoint another director with product and brand expertise by Oct. 1.
Wilson said the changes reflected “meaningful progress toward restoring the company’s product-first vision and unlocking tremendous value for shareholders.” He agreed to an 18-month agreement on non-disparagement, voting, and other actions until shortly before the company’s 2028 annual meeting.