Lululemon has issued a disappointing outlook for 2026, grappling with rising tariffs, increased expenses, and a contentious proxy battle involving founder Chip Wilson. The athleisure giant’s forecast for both the upcoming quarter and the fiscal year fell short of analysts’ expectations, revealing a concerning trend for investors.
For the first quarter, Lululemon anticipates sales between $2.40 billion and $2.43 billion, below the $2.47 billion predicted by LSEG. Expected earnings per share are projected to range from $1.63 to $1.68, significantly trailing the estimated $2.07. Looking ahead to the full fiscal year, Lululemon expects sales between $11.35 billion and $11.50 billion, again falling short of the $11.52 billion forecast. Additionally, its earnings guidance of $12.10 to $12.30 per share starkly contrasts with an anticipated $12.58. Interim co-CEO Meghan Frank emphasized the need for course corrections during an interview with CNBC, stating, “The work is really underway in terms of our action plan… we are excited about some of the momentum we have on that line item.”
Despite a stronger-than-expected performance in its latest holiday quarter, where net income reached $586.9 million-an increase over the expected $4.78 per share-Lululemon faces ongoing struggles. The company recorded a marginal rise in sales to $3.64 billion, just edging out the $3.58 billion forecast. Analysts had reduced their projections prior to earnings, highlighting the challenges Lululemon faces.
The athleisure company, known for its premium products, has recently begun leveraging discounts to stimulate sales-a strategy it aims to scale back this year. Frank noted that this shift might impact short-term sales but will ultimately help restore Lululemon to a full-price strategy. The impact of tariffs looms large, with Lululemon estimating costs of $380 million, up from $275 million last year. The net effect, accounting for mitigation efforts, is expected to be $220 million in 2026.
Moreover, higher operational expenses, including marketing and labor costs coupled with financial pressures from the proxy contest with Wilson, add to the company’s burdens. Wilson, Lululemon’s largest independent shareholder, has pushed for changes to its board and criticized its current strategies. In a bid to respond to shareholder concerns, Lululemon recently appointed former Levi Strauss CEO Chip Bergh to its board, while David Mussafer, an existing board member, will not seek re-election due to ongoing scrutiny from Wilson.
Lululemon’s performance is particularly uneven among its markets. While growth is occurring in China-projected to increase about 20%—sales in the Americas have stagnated, with same-store sales declining for nearly two years. For 2026, the company expects a further decline of 1% to 3% in the Americas. The contrast underscores the challenges Lululemon faces as it attempts to navigate a competitive landscape while maintaining brand integrity.
With ongoing strategic shifts and internal pressures, Lululemon is at a critical juncture. Stakeholders will be closely monitoring the company’s progress as it works to address these pressing issues and stabilize its position in the market.
Original Source: https://www.cnbc.com/2026/03/17/lululemon-lulu-earnings-q4-2025.html
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Publish Date: 2026-03-18 04:08:00
