Lululemon shares fall as weaker outlook raises questions over brand differentiation

Lululemon shares fell 17.8% in pre-market trading on 4 September after the athletic apparel retailer reported lower second-quarter revenue and comparable sales, alongside another reduction to its fiscal 2026 outlook.

Summary of results 

• Shares fell 17.8% in pre-market trading on 4 September.
• Second-quarter revenue declined 4% to $2.4 billion, while comparable sales dropped 9%.
• Lululemon now expects annual revenue to fall between 5% and 7%.
• Incoming CEO Heidi O’Neill is due to join the business on 8 September.

Lululemon further reduced its fiscal 2026 revenue outlook to between $10.350 billion and $10.500 billion, representing a decline of 5% to 7%. In June, the company had already decreased its annual guidance to between $11.0 billion and $11.15 billion, from $11.35 billion and $11.50 billion.

"While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook," said Meghan Frank, Interim Co-CEO and Chief Financial Officer.

Its latest forecast now points to a broader contraction while incoming Chief Executive Heidi O’Neill prepares to take control after a 26-year Nike career.

O'Neill, who is joining the company next week, marks an "exciting new chapter for the company", said André Maestrini, Interim Co-CEO, President and Chief Commercial Officer. 

Lululemon reported net revenue of $2.4 billion for the quarter ended 2 August, down 4% year-on-year and 5% on a constant-dollar basis.

Comparable sales fell 9%, or 10% in constant currency. Americas revenue declined 8% and comparable sales dropped 12%, while international revenue rose 4%. International comparable sales were down 3%.

This pattern mirrors Lululemon's 2025 full-year results, which saw international revenue grow by 22% but Americas revenue declined by 1%. Management had, at that point, flagged improving full-price sales in North America as a priority for 2026.

Operating income was down 13%, reaching $453.7 million.

Maestrini commented that he remained "confident" in the brand's ability to "take the right steps to strengthen our performance and deliver sustainable growth over time".

Frank pointed to the company's focus on "accelerating growth by strengthening our product offerings, increasing our marketing investments and maintaining disciplined expense management."

"Looking ahead, we have confidence in the strength of the lululemon brand, the deep connection we have with our guests and ambassadors, and the significant opportunities we see to drive long-term growth," she added. 

Experts call for clearer brand positioning

Patrick Ricciardi, Analyst at Third Bridge, said interviews with athletic apparel executives indicated that Lululemon's positioning as "the benchmark of athleisure has faded, with the brand increasingly seen as selling apparel rather than the lifestyle proposition that originally differentiated it".

The Third Bridge experts further noted that Lululemon had broadened its target audience without retaining a clearly defined core customer, contributing to its recent underperformance. 

"Incoming CEO Heidi O'Neill brings a strong track record in scaling direct-to-consumer businesses, developed during her tenure at Nike. However, our experts suggest Lululemon's more pressing need is a renewed focus on product innovation, design and the user experience, rather than further scaling. Any resulting strategic shift is unlikely to be visible for at least 12-18 months given the company's product development cycle," they said.