Lululemon has forecast weaker-than-expected revenue and profit for 2026, as the athleisure giant grapples with slowing demand, rising costs and ongoing leadership uncertainty.
The retailer expects full-year revenue to reach between £9.0 billion and £9.1 billion, falling short of analyst expectations of around £9.1 billion. It also guided earnings per share of £9.56 to £9.72, below the £9.94 forecast.
Shares dipped around 1.5 per cent in extended trading following the update, with the stock down roughly 23 per cent year-to-date.
Demand pressures and product reset
The cautious outlook comes as Lululemon faces softer consumer spending, increased competition and internal challenges around product innovation.
The brand, known for its premium-priced leggings and athleisurewear, has struggled with a perceived lack of design freshness, while competitors such as Nike and newer entrants including Alo Yoga and Vuori continue to gain traction.
Interim co-CEO and CFO Meghan Frank said restoring full-price sales growth in North America is a key priority.
“A top priority for the management team… is returning to full-price sales growth… through steps that include the inflection of product newness, SKU reduction and rebalancing inventory levels,” she said.
The company is also aiming to reduce markdown activity and improve margins, as it looks to regain pricing power in a more cautious consumer environment.
Tariff pressures mount
Lululemon expects U.S. import tariffs to have a gross impact of around £300 million in 2026, up from roughly £217 million the previous year, reflecting its continued reliance on sourcing and manufacturing in China.
Despite this, the retailer said it expects to offset “almost all” of the tariff impact through operational improvements and pricing strategies.
However, margins are already under pressure. Gross margin fell by 550 basis points in the fourth quarter, including a 520 basis point hit from tariffs.
Leadership uncertainty and boardroom battle
The update comes amid significant leadership and governance challenges for the business.
Lululemon is currently searching for a permanent CEO following the departure of Calvin McDonald in January. In the interim, the company is being led by Meghan Frank.
At the same time, the group is facing a proxy battle led by founder Chip Wilson, who has criticised the board’s strategic direction and its handling of CEO succession.
Wilson, who owns a 4.27 per cent stake, has also raised concerns over potential conflicts of interest and has nominated three independent directors, while calling for annual board elections.
Former Levi’s CEO joins board
In a move aimed at strengthening governance, Lululemon has appointed former Levi Strauss CEO Chip Bergh to its board.
The company said Bergh brings a “proven record of guiding successful transformations”, while board chair David Mussafer will not stand for re-election at the end of his term.
Analysts have broadly welcomed the appointment, with Morningstar’s David Swartz describing Bergh as a strong addition given his experience in the apparel sector.
Bright spot in international growth
Despite the cautious outlook, Lululemon delivered a stronger-than-expected performance over the crucial holiday quarter, beating both analyst forecasts and its own January guidance.
This was driven in part by a 17 per cent increase in international revenue, highlighting continued growth opportunities outside North America.
However, broader weakness in athletic apparel, combined with inflationary pressures and declining consumer confidence, could continue to weigh on performance, particularly for premium brands operating at higher price points.
Click here to sign up to Retail Gazette‘s free daily email newsletter
