NEW YORK, June 5, 2026, 06:01 (EDT)
Lululemon Athletica shares dropped nearly 12% premarket Friday after the company lowered its yearly profit outlook and projected second-quarter earnings well under what analysts expected, raising more questions about its North American recovery. Shares last finished at $124.92. Reuters reported the premarket fall would wipe out over $1.7 billion in market value if it lasts.
Lululemon shares were already down hard, off almost 63% for the past year, Reuters said. The latest guidance points to U.S. demand hurting margins and profit as well as sales.
The overall market held up better. LSEG market data from Reuters showed the S&P 500 up 0.41%, while the Nasdaq Composite slipped just 0.09% in the last session. Lululemon dropped for reasons tied to the company.
Lululemon (LULU) said first-quarter revenue climbed 4% to $2.5 billion, but diluted EPS dropped to $1.69 from $2.60 last year. The company reported a 3% decline in Americas revenue, down 4% in constant dollars, while China Mainland revenue jumped 30%, or 23% when adjusted for currency.
Lululemon slashed its guidance. The company now sees fiscal 2026 revenue between $11.0 billion and $11.15 billion, down 1% or flat. Diluted EPS is now projected at $10.95 to $11.15, compared with its earlier range of $12.10 to $12.30. For Q2, Lululemon guided earnings to $1.76 to $1.81 a share, which is well below the $2.68 analysts expected, according to LSEG.
Margins slipped too. Gross margin dropped 410 basis points to 54.2%. Lululemon pointed to higher tariffs, more markdowns and bigger inventory provisions as reasons.
Lululemon interim co-CEO and CFO Meghan Frank called it a “solid start to 2026,” but pointed to “headwinds that have led us to adjust our outlook.” Frank said they’re working to reposition segments of the business and improve the product engine. Lululemon Corporate
Lululemon interim co-CEO and chief commercial officer André Maestrini said the company still has “more work to do,” despite moving ahead in new markets and rolling out product capsules in training, tennis and running. Lululemon Corporate
Guggenheim Securities analyst Simeon Siegel told Reuters Lululemon has “a strong brand, but an overstretched one.” He warned North American revenue could take another hit if the company does not improve its product and message. Reuters
Lululemon’s product problem isn’t going away. Frank told analysts the yoga campaign didn’t have the “expected halo effect” on other products, and said “negative commentary” on the brand was a drag. Revenue is coming in slower than hoped, so more seasonal clearance—meaning discounts on older stock—is coming, she said. Reuters
Lululemon is feeling more heat from upstart activewear rivals like Alo Yoga and Vuori, Reuters reported. Investors are now watching new CEO Heidi O’Neill, formerly of Nike, as she prepares to step in this September. The handover follows a proxy battle with founder Chip Wilson that wrapped up in May.
Bears face some risk if China stays solid, tariff refunds come through, or Lululemon holds to its $1.5 billion cash pile from quarter-end. On the other hand, if North American traffic keeps slipping, clearance activity could hit margins and drive another cut to earnings forecasts.
Lululemon’s brand remains strong, but investors want to see results before paying up. The stock slipped in premarket trading Friday, as the market holds out for proof of a real turnaround.
Related articles: NASDAQ:LULU
