Lululemon Warns of Slowdown With Weak 2026 Forecast

Edgen Stock·Mar 17 2026, 20:21

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Key Takeaways

Lululemon reported fourth-quarter results that beat lowered Wall Street expectations but delivered a weak forecast for fiscal 2026, signaling a significant slowdown. The disappointing outlook is driven by declining sales in the Americas, rising tariff costs, and an ongoing conflict with its founder, raising concerns about the brand's momentum in its most critical market.

Weak 2026 Outlook: The company projects full-year sales of $11.35 billion to $11.50 billion and earnings per share of $12.10 to $12.30, both missing analyst estimates.
Americas Sales Decline: Sales in the Americas, its largest region, are forecast to decline by 1% to 3% in 2026, a major headwind for consolidated growth.
Mounting Financial Pressures: Lululemon faces $380 million in expected tariff costs for the year and strategic difficulties as it attempts to pull back from promotional discounting to protect its premium brand status.

2026 Guidance Falls Short Despite Q4 Beat

Lululemon's fourth-quarter results on March 17 surpassed diminished analyst expectations, but a grim outlook for fiscal 2026 erased any investor optimism. The company posted quarterly earnings of $5.01 per share on revenue of $3.64 billion, topping consensus estimates of $4.78 per share and $3.58 billion in revenue. However, the beat was overshadowed by management's forward-looking guidance, which fell significantly short of projections.

For the first quarter of 2026, Lululemon expects sales between $2.40 billion and $2.43 billion, below the $2.47 billion analysts anticipated. The full-year forecast was equally disappointing, with projected sales of $11.35 billion to $11.50 billion missing the $11.52 billion estimate. The earnings guidance of $12.10 to $12.30 per share for the year also landed well below the consensus of $12.58, signaling a period of decelerating growth.

Americas Sales to Fall 3% as Headwinds Mount

A primary driver of the weak forecast is a pronounced slowdown in the company's largest and most mature market. Lululemon projects that sales in the Americas will decline between 1% and 3% in fiscal 2026, a stark reversal for a brand accustomed to strong domestic growth. This weakness in North America, where same-store sales have been stagnant for two years, contrasts sharply with expected growth of around 20% in China, which remains too small a part of the business to offset the slump.

Compounding the sales issue are mounting operational and strategic pressures. The company anticipates tariffs will cost it $380 million in 2026, up from $275 million the previous year. At the same time, Lululemon is navigating a proxy battle with founder Chip Wilson, who has publicly criticized the board for its creative strategy.

The core issue at lululemon is one the Company has struggled with for years: there is a disconnect between the Company’s creative engine and the Board’s understanding for how brand power and product excellence fuel cultural strength, margin durability and long-term shareholder value.

— Chip Wilson, Founder