Lululemon cuts profit forecast as brand reset alarms investors

Lululemon’s steepest warning in years rattled investors Friday, with shares falling 9% and opening at $110.43, the lowest level since June 2018. The drop reflected more than a weak quarter: it raised a sharper question about whether the company’s slump is just a product stumble or evidence that even premium brands are losing their grip on pricing power as shoppers pull back.

The athleisure company cut its fiscal 2026 revenue forecast to $11.0 billion to $11.15 billion, down from a prior range of $11.35 billion to $11.5 billion. It also reduced its earnings outlook to $10.95 to $11.15 a share from $12.10 to $12.30. For the second quarter, Lululemon guided revenue to $2.45 billion to $2.48 billion, below Wall Street expectations, even though first-quarter net revenue still rose 4% to about $2.5 billion. That top-line gain masked a weaker U.S. business, with Americas sales falling 3% and comparable sales down 5%, while international revenue jumped 22%.

The company said the slowdown reflected “headwinds” from tariffs and softer demand. It is also discounting older inventory and revamping marketing as it tries to reset the brand after a run of product misses that have unsettled loyal customers. That matters because Lululemon built its reputation on scarcity, consistency and a premium image that justified leggings priced as high as $178. When those pillars wobble, the damage shows up fast in margins, guidance and valuation.

The pressure is landing while Lululemon is in the middle of a broader power shift. Heidi O’Neill is set to become chief executive and join the board on September 8, based in Vancouver, as interim co-CEOs Meghan Frank and André Maestrini run the company with executive chair Martha Morfitt. The board has already been reshaped with the addition of Chip Bergh and Esi Eggleston Bracey, and the company reached a cooperation agreement with founder Chip Wilson on May 27. Wilson, who owns about 8.7% of outstanding common stock, agreed to board changes that will bring Laura Gentile and Marc Maurer onto the board after the June 25 annual meeting.

For investors, the mix is what matters: weaker U.S. demand over the past six or seven weeks, tariff pressure, a product reset and a founder fight are arriving at once. Lululemon now has to persuade the market that this is a temporary bruise, not a sign that one of retail’s most prized premium brands is becoming vulnerable to a more cautious consumer.