Lululemon Lowers Full-Year Guidance Amidst Business Headwinds
Lululemon 's troubles are far from over.
The interim CEO of the athletic apparel retailer, Meghan Frank, pointed to undisclosed "headwinds" as the company lowered its full-year guidance and issued a weak current quarter outlook on Thursday.
"We have been navigating headwinds that have led us to adjust our outlook for the full year," Frank said in a news release. "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."
The company's shares dropped more than 7% in extended trading following the report. Lululemon's stock has plunged about 40% this year as of Thursday's close.
Lululemon is now expecting fiscal 2026 sales to be between $11 billion and $11.15 billion, down from a previous range of between $11.35 billion and $11.50 billion. Analysts were expecting full-year sales of $11.48 billion, according to LSEG.
Lululemon also cut its earnings guidance by more than $1 per share. It's now expecting earnings per share to be between $10.95 and $11.15 for the year, down from a previous range of $12.10 to $12.30. Analysts were expecting $12.30 per share, according to LSEG.
The current quarter doesn't look much better. Lululemon is expecting sales to be between $2.45 billion and $2.48 billion, below expectations of $2.60 billion, according to LSEG. It's expecting earnings per share to be between $1.76 and $1.81, well below expectations of $2.68, according to LSEG.
While Lululemon's guidance failed to meet forecasts, it did beat expectations on the top and bottom lines during its fiscal first quarter, albeit on expectations that were lower than analyst previously had. Here's how the company performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
Earnings per share: $1.69 vs. $1.68 expected
Revenue: $2.47 billion vs. $2.43 billion expected
The company's reported net income for the three-month period that ended May 3 was $195.0 million, or $1.69 per share, compared with $314.6 million, or $2.60 per share, a year earlier.
Sales rose to $2.47 billion, up about 4% from $2.37 billion a year earlier.
In the three months since Lululemon last reported earnings, the athletic apparel retailer has been busy. It hired longtime Nike veteran Heidi O'Neill to be its next CEO and settled a dramatic proxy contest with its founder. Investors are likely to be relieved Lululemon's management team no longer has to put its focus and cash behind the proxy contest, but some are still feeling sour over O'Neill's appointment, particularly because she won't be able to start until September.
Under the direction of two interim CEOs, CFO Frank and Chief Commercial Officer André Maestrini, Lululemon has been working to rebuild its product assortment and address its domestic growth challenge. But the real strategy changes won't come until O'Neill starts.
Given how long it takes for Lululemon to get from product idea to market, there's concern that it'll take longer than expected to fix the challenges that have been weighing on its business.
In the meantime, Lululemon has been relying more on discounts to drive sales, which has hurt its bottom line and its reputation as a premium brand. It's also struggled with innovation and quality issues, including complaints that its leggings were see-through.
While at Nike, O'Neill established and built Nike's women's business and grew it into a multibillion-dollar franchise. She also worked to reduce product lead times – experience that will serve her as Lululemon's chief executive.
