LULU Stock Plunges On Weak North American Demand And 2026 Outlook Cut — Retail Flags Risks

• Though American revenue dropped in the first quarter, international markets revenue helped offset it. 
• Interim Co-CEOs Meghan Frank and André Maestrini cited “positive signals” in North America, but acknowledged recent headwinds and the need for further repositioning.
• Heidi O’Neill—a 28-year Nike veteran and most recently President of Consumer, Product and Brand at Nike— will join as Lulu’s permanent CEO on September 8. 
   

Lululemon Athletica Inc. (LULU) shares plunged about 11% in after-hours trading on Thursday following modest first-quarter revenue growth, a sharp decline in North American performance, and a significant downward revision to full-year guidance amid ongoing domestic headwinds.

For the quarter ended May 3, net revenue rose 4% to $2.5 billion, compared to a Wall Street estimate of $2.4 billion. Comparable sales edged up 1% but fell 2% on a constant-currency basis. The Americas—the company’s largest market—saw revenue drop 3% and comparable sales decline 5%. International markets offset some weakness, with revenue surging 22% and comparable sales up 13%.

Margins and profits weakened. Gross margin contracted 410 basis points to 54.2%, operating income fell 37% to $276.9 million, and diluted earnings per share dropped to $1.69 from $2.60 a year earlier, though higher than the $1.68 expected by analysts, as per Fiscal AI. The company repurchased $358 million of shares in the quarter and ended with $1.5 billion in cash.

Interim Co-CEOs Meghan Frank and André Maestrini cited “positive signals” in North America, including better full-price sales trends and strength in training, tennis, and running capsules, but acknowledged recent headwinds, the need for further repositioning, and noted that there is more work to do.

Revised Outlook

Lululemon now expects second quarter (Q2) revenue of $2.45–$2.475 billion, down 2–3% year-on-year, and EPS of $1.76–$1.81. 
For full-year 2026, it cut guidance to revenue of $11.00–$11.15 billion, from its previous estimate of $11.35 billion to $11.50 billion and below an expected $11.5 billion. Earnings per share for the fiscal year is now expected between $10.95–$11.15, below an estimated $12.29, and lower than the former guidance of $12.10 to $12.30. 
The fresh outlook assumes a near 30% tax rate and excludes potential tariff refunds or additional buybacks.

The results highlight persistent pressure on Lululemon’s core North American business from softer premium apparel demand and competition, even as international growth remains robust. The company operates under interim co-CEOs until Heidi O’Neill—a 28-year Nike veteran and most recently President of Consumer, Product and Brand at Nike— joins as its permanent CEO on September 8.

How Did LULU Retail Traders React?

On Stocktwits, retail sentiment around LULU stock jumped from ‘neutral’ to ‘extremely bullish’ territory over the past 24 hours, while message volume increased from ‘normal’ to ‘extremely high’ levels.

A Stocktwits user highlighted upsides, including further share purchases under the company’s buyback program and tariff rebates, while also highlighting that the stock is not without risk.

Another user opined that the company needs a massive restructuring.

A third user expressed disappointment about the company’s upcoming CEO, highlighting the tough times Nike’s been through.

“I have been critical of LULU in the past given the revolving door of CEOs over the past five years, the strained relationship between founder Chip Wilson and the Board, and intense competition from Vuori, Alo, and Skims (Kardashian) with little or no product differentiation,” the Future Fund Managing Partner, Gary Black, said in a post on X, highlighting the reasons which pushed the stock down 41% this year. Lulu’s heated proxy battle with founder Chip Wilson was resolved only last month. 

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