Lululemon Cuts 2026 Outlook, Q1 Revenue Up 4% Despite Americas Slump
LULU•Lululemon’s first-quarter net revenue rose 4% to $2.5 billion but Americas sales fell 3% with comparable sales down 5% while international revenue surged 22%. The company cut 2026 revenue guidance to $11.00–11.15 billion and EPS to $10.95–11.15, and announced former Nike executive Heidi O’Neill as permanent CEO effective September 8.
1. Q1 Financial Performance
For the quarter ended May 3, net revenue rose 4% to $2.5 billion, with comparable sales up 1% but down 2% on a constant-currency basis. Gross margin contracted 410 basis points to 54.2%, operating income fell 37% to $276.9 million, EPS dropped to $1.69, and the company repurchased $358 million in shares, ending with $1.5 billion in cash.
2. Guidance Revision
Lululemon now expects Q2 revenue of $2.45–2.475 billion (down 2–3% year-over-year) and EPS of $1.76–1.81. Full-year 2026 guidance was cut to $11.00–11.15 billion in revenue and $10.95–11.15 in EPS, versus prior targets of $11.35–11.50 billion and $12.10–12.30 EPS, assuming a near 30% tax rate.
3. Market Segment Trends
The Americas, Lululemon’s largest market, saw a 3% revenue decline and a 5% drop in comparable sales, reflecting softer premium apparel demand and rising competition. International markets posted a 22% revenue surge and 13% comparable-sales growth, offsetting some domestic weakness.
4. Leadership Appointment
Interim co-CEOs highlighted positive signals in full-price sales and strength in training, tennis and running capsules but underscored the need for further repositioning. Heidi O’Neill, a 28-year Nike veteran and former President of Consumer, Product and Brand, will assume the permanent CEO role on September 8.
