Lululemon Cuts Annual Revenue, Profit Outlook Again a Week Before New CEO Takes Over

Lululemon Athletica recently reduced its full-year outlook for the second time in a short period. This move highlights the daunting challenges that incoming CEO Heidi O’Neill faces in regaining market share from newer competitors like Alo Yoga and Vuori. The company's stock has plummeted, dropping nearly 69 percent since early 2025, and it missed its quarterly sales estimates, further denting investor confidence.

Lululemon's woes are exacerbated by declining sales in China, where revenue fell 2 percent in constant dollars, contrasting sharply with a 24 percent rise a year earlier. The brand's core product, leggings, saw a 20 percent decline in sales, and efforts to diversify into loose silhouettes have yet to yield the desired results. The company's leadership has acknowledged that a lack of compelling products and recent marketing missteps are to blame.

Meghan Frank, Interim Co-CEO and CFO, admitted, "We expected a better response," indicating the significant work ahead for the new CEO. O’Neill, a seasoned executive with experience turning around athletic apparel brands, is tasked with reviving Lululemon's product innovation and marketing efforts. However, analysts caution that it could take several years before new initiatives bear fruit.

Lululemon now expects fiscal 2026 revenue to decline 5 to 7 percent, and earnings per share to fall to US$9.48 to US$9.73 from the previous forecast of US$10.95 to US$11.15. The company's China sales weakness, coupled with persistent struggles in the Americas market, underscores the uphill battle O’Neill and the team must navigate.