Lululemon cuts annual revenue forecast for second time in months as outlook darkens

Lululemon Athletica Inc. LULU-Q has lowered forecasts for its financial performance in the year ahead for the second time in just three months, citing “challenging dynamics” that continue to drag on the retailer’s sales and profits.

On Thursday, the Vancouver-based apparel maker said it now expects net revenue in fiscal 2026 (which ends Jan. 31, 2027) to decline by 5 to 7 per cent compared to last year, to roughly US$10.35-billion to $10.5-billion.

That indicates that the company’s outlook has significantly darkened since its last quarterly report in June, when Lululemon also cut its forecasts. At the time, the company signaled that it expected revenue to be flat or down by roughly 1 per cent this year.

“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” Meghan Frank, Lululemon’s chief financial officer and interim co-chief executive officer, said in a press release on Thursday afternoon. “Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management.”

The retailer reported its second-quarter net revenue fell to US$2.4-billion, down 4 per cent compared to the same period last year, or 5 per cent when compared on a constant-currency basis. The results were dragged down by continued struggles in North America, Lululemon’s largest and most important market.

Comparable sales, an important metric that tracks sales results not influenced by store closings or new store openings, fell by 9 per cent, or 10 per cent on a constant-dollar basis, in the quarter ended Aug. 2.

More to come