lululemon warns of margin pressure, cuts forecast as sales cool

When product momentum slips, the pressure does not stay on a spreadsheet. lululemon’s latest quarter showed how softer demand can quickly reach the selling floor, where store teams are left managing slower turns, more markdowns, and tougher conversations with shoppers who are not buying at full price.

For the quarter ended May 3, 2026, net revenue rose 4 percent to $2.5 billion, but comparable sales increased just 1 percent. The trouble was sharper in the Americas, where revenue fell 3 percent and comparable sales dropped 5 percent. Gross margin fell 410 basis points to 54.2 percent, operating margin fell 730 basis points to 11.2 percent, and diluted earnings per share sank to $1.69 from $2.60 a year earlier.

That is the chain retail workers know well: softer product launches lead to weaker traffic, weaker traffic leads to heavier promotional pressure, and heavier promotions squeeze margin. lululemon said it was taking additional actions to reposition where needed and strengthen its product engine, a sign that the fix is not cosmetic. The company opened five net new stores and ended the quarter with 816 company-operated locations, but expansion did not offset the drag from North America, where management said full-price sales improved sequentially before headwinds returned.

The company also bought back 2.2 million shares for $358.3 million, even as it cut its annual profit forecast and said second-quarter earnings would come in well below Wall Street estimates. Management pointed to negative commentary across media and social channels, along with product launches that did not meet expectations. Meghan Frank also linked some of that criticism to the proxy contest with founder Chip Wilson and questions about product composition. Investors took the warning seriously: the shares fell to an eight-year low.

For Big Lots workers, the lesson is not about yoga pants. It is about what happens inside any store when the assortment misses. Variety Wholesalers has already taken a different path with Big Lots, acquiring 219 stores out of bankruptcy and moving the chain toward less furniture, more low-priced, name-brand apparel, and a “brands for less” pitch. It said the rebuilt chain would run through two Roses Discount Stores distribution centers in Newnan, Georgia, and Henderson, North Carolina.

That is the warning sign to watch in your own department: if product is sitting too long, if markdowns start coming faster, if managers get stricter about presentation and inventory accuracy, the pressure has already moved from headquarters to the floor. In retail, weak momentum always becomes somebody’s daily job.