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Lululemon’s turnaround has become increasingly difficult, with the athletic-apparel giant facing a steep decline in sales, weakening consumer demand and mounting pressure ahead of a major leadership transition.
Shares of the Vancouver-based retailer plunged 17% on Friday, falling to an eight-year low as investors reacted to disappointing second-quarter results and a significant cut to the company’s full-year outlook. The stock closed at $100.61, after touching a 52-week low of $97.99, wiping billions of dollars from Lululemon’s market value.
The selloff comes just days before incoming CEO Heidi O’Neill is scheduled to take the helm, putting the former Nike executive at the center of one of the company’s most challenging periods in recent years.
Lululemon now expects fiscal 2026 revenue to decline between 5% and 7%, with projected revenue of approximately $10.35 billion to $10.50 billion.
The new forecast represents a dramatic reversal from the company’s expectations only three months earlier, when it projected fiscal-year revenue of between $11 billion and $11.15 billion.
The revision is particularly significant given Lululemon’s earlier ambition of reaching $12.5 billion in sales this year.
The company also lowered its full-year earnings outlook to between $9.48 and $9.73 per share, down considerably from its previous forecast of $10.95 to $11.15 per share.
Investors are now bracing for continued weakness, with Lululemon forecasting third-quarter revenue to decline between 10% and 11%.
The biggest concern is the deterioration of Lululemon’s performance in the Americas, historically one of the company’s most important markets.
During the latest quarter, revenue in the Americas fell 8%, while comparable sales declined 12%.
Worldwide, revenue dropped 4% to $2.42 billion, while comparable sales fell 9%.
The figures highlight how significantly consumer demand has weakened and how difficult it has become for the company to regain momentum following a series of product-related setbacks.
Lululemon’s North American comparable sales had already fallen 3% during the second quarter of fiscal 2024, when the company pulled its $98 Breezethrough leggings after customers raised concerns about their fit and design.
By the second quarter of fiscal 2025, Americas comparable sales were down 4%.
That decline has now accelerated dramatically to 12%.
Lululemon’s challenges extend beyond broader consumer weakness. A series of product issues has also affected the brand’s relationship with shoppers.
In January, the company temporarily paused online sales of a new product line following customer complaints, including concerns that some of the fabric was too sheer.
The episode added to concerns about product execution at a company whose premium positioning depends heavily on customer confidence in the quality, fit and design of its apparel.
The impact is particularly important because women’s apparel represented approximately 63% of Lululemon’s fiscal 2025 revenue.
Leggings, one of the brand’s signature categories, have also experienced a significant slowdown. Sales fell approximately 20% in the latest quarter as consumers increasingly gravitated toward looser-fitting styles.
The shift reflects a broader challenge for Lululemon: adapting quickly to changing consumer preferences while maintaining the product identity that helped establish the company as a premium athletic-apparel leader.
Against this backdrop, Heidi O’Neill is preparing to become Lululemon’s next CEO.
The former Nike executive is taking over at a moment when the company needs to address several challenges simultaneously, including declining sales, product execution, weaker store productivity and intensifying competition.
O’Neill will replace Calvin McDonald, who left the company under significant pressure at the end of January.
Her arrival represents an opportunity for Lululemon to reset its strategy and rebuild momentum, but the latest financial results demonstrate how much work lies ahead.
The immediate priority will be restoring consumer confidence and creating products that resonate with shoppers again, particularly in the Americas.
Lululemon built its reputation by successfully turning performance apparel into a premium lifestyle category. Its strong brand identity, loyal customer base and distinctive product positioning helped the company become one of the most recognizable names in athletic apparel.
But the latest numbers suggest that the company’s previous growth formula is facing serious pressure.
The combination of changing fashion preferences, product missteps, weaker store productivity and increasingly competitive athleticwear markets has created a difficult environment.
For investors, the sharp stock decline reflects growing concern about how quickly the retailer can reverse the deterioration.
For O’Neill, the challenge is even more immediate.
She must stabilize the business while simultaneously determining how Lululemon can return to sustainable growth without losing the brand identity that made it successful.
The coming quarters will be crucial for Lululemon.
With third-quarter revenue expected to fall as much as 11%, the company is unlikely to experience an immediate recovery. Rebuilding its performance will require improvements across product development, customer demand, store productivity and competitive positioning.
The decline in leggings sales also underscores the need for the company to respond more effectively to changing consumer tastes.
As O’Neill begins her tenure, the pressure will be on to deliver a clear strategy capable of reversing the slide in the Americas and restoring confidence among both shoppers and investors.
Lululemon’s latest results mark a significant moment for the company. Once celebrated for its powerful brand momentum and premium positioning, the retailer now faces a demanding reset.
For its incoming CEO, the task is not simply to manage a difficult quarter—it is to determine how Lululemon can regain its relevance, rebuild trust and return to growth in an increasingly competitive athletic-apparel market.
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