Lululemon Cuts 2026 Forecast to $11B–$11.15B, Faces Proxy Fight
LULU•Lululemon cut its 2026 revenue forecast to $11.0–11.15bn and lowered EPS guidance to $10.95–11.15 after Q1 revenue rose 4% to $2.5bn but Americas sales fell 3%, shrinking operating income 37% to $276.9m. Founder Chip Wilson nominated three board candidates and won approval for two new directors.
1. Q1 Performance and Financial Metrics
Lululemon reported Q1 net revenue of $2.5bn, up 4% year-over-year, driven by a 22% rise in international sales (16% constant currency) offset by a 3% decline in the Americas; comparable sales increased 1% overall (–5% Americas, +13% international). Gross profit fell 3% to $1.3bn as gross margin contracted 410 basis points to 54.2%, and operating income dropped 37% to $276.9m, with diluted EPS at $1.69.
2. Revised 2026 Outlook
The company cut full-year fiscal 2026 net revenue guidance to $11.0–11.15bn (down from $11.35–11.50bn) and trimmed EPS outlook to $10.95–11.15 (from $12.10–12.30), citing persistent headwinds in North America. For Q2, it forecasts net revenue of $2.45–2.475bn and EPS of $1.76–1.81, reflecting anticipated declines in same-store sales.
3. Board Proxy Fight and Governance Deal
Founder Chip Wilson nominated three candidates to the board in a proxy fight and reached a cooperation agreement to add two of his nominees in 2026, ending a months-long dispute and reshaping board composition to include fresh perspectives.
4. Strategic Actions and Inventory Position
Management repurchased 2.2m shares for $358.3m and opened five net new stores, raising its total to 816 locations. Inventories at quarter-end were $1.7bn (2% higher year-over-year), and leadership detailed plans to strengthen the product engine and reposition operations in North America.
