Lululemon announced a cautious outlook for 2026 amid ongoing challenges, including heightened tariffs, increased operating expenses, and a controversial proxy battle with founder Chip Wilson. The athleisure brand’s guidance for upcoming quarters fell short of analysts’ expectations, projecting first-quarter sales between $2.40 billion and $2.43 billion, below the anticipated $2.47 billion. Earnings per share for the same period are expected to range from $1.63 to $1.68, compared to estimates of $2.07.
For the full fiscal year, Lululemon forecasts sales between $11.35 billion and $11.50 billion, also under the expected $11.52 billion. The anticipated earnings per share of $12.10 to $12.30 is considerably less than the predicted $12.58. The company’s interim co-CEO, Meghan Frank, noted efforts to address these challenges, highlighting an upcoming product line from a new creative director and ongoing enhancements to their market strategy.
Despite facing difficulties, Lululemon performed better than expected in its recent holiday quarter, achieving earnings per share of $5.01 against a forecast of $4.78 and revenue of $3.64 billion, slightly up from the previous year. Nonetheless, the brand has shifted towards discounting to move inventory, a significant departure from its traditional premium pricing strategy.
Elevated tariffs are projected to cost Lululemon $380 million this year, impacting the company’s profit margins. The company is negotiating with suppliers to mitigate these costs but remains hesitant to raise prices further due to competitive pressures. The controversy surrounding the board, particularly involving Wilson’s critique of its creative direction, adds to the retailer’s struggles.
Lululemon’s expected sales decline in the Americas, alongside anticipated growth in international markets, sets the stage for a challenging year ahead as it navigates these complex dynamics.
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