Lululemon Athletica (NASDAQ:LULU) reported fourth-quarter results that exceeded analyst expectations on both revenue and profit, but its outlook for the current quarter and full-year 2026 came in below forecasts, sending the stock lower in early premarket trading on Wednesday.
Shares of the athleisure apparel company declined about 2.2% ahead of the market open.
The results arrive as consumer spending on discretionary items remains under pressure from elevated interest rates, persistent inflation and ongoing geopolitical uncertainty. Lululemon’s Americas division in particular has struggled to regain momentum.
For the fourth quarter of 2025, Lululemon posted earnings of $5.01 per share on revenue of $3.64 billion, surpassing analyst expectations of $4.79 per share on $3.58 billion in revenue.
Comparable sales for the quarter increased 3%, driven largely by strong international performance, where comparable sales surged 20%. In contrast, comparable sales in the Americas declined 1%.
“As we begin our new fiscal year, we are focused on executing on our action plan, offering new and differentiated products to our guests, and elevating their experiences with lululemon. Driving improvement in our full-price sales over the course of 2026 is also a key priority, particularly in North America,” LULU interim co-CEO and finance chief Meghan Frank said in a statement.
The company’s latest results also come amid internal challenges, including an ongoing proxy battle initiated by founder and major shareholder Chip Wilson. Lululemon is also currently without a permanent chief executive after Calvin McDonald stepped down from the role at the end of January.
“Lululemon is in a tough spot. The company is facing serious challenges both internally and externally—some of which are self-inflicted, like its ongoing merchandising issues, while others reflect the weakening environment for athleisure,” Rachel Wolff, analyst at Emarketer, said.
“Lululemon’s lack of CEO and proxy battle with founder Chip Wilson have left the company rudderless at a time of considerable uncertainty, complicating its ability to manage tariffs and other headwinds,” Wolff said.
Separately, Lululemon announced the appointment of former Levi Strauss (NYSE:LEVI) CEO Chip Bergh to its board of directors.
Looking ahead, the company expects first-quarter 2026 earnings between $1.63 and $1.68 per share on revenue ranging from $2.40 billion to $2.43 billion. Analysts had been forecasting earnings of $2.09 per share on revenue of $2.474 billion.
For the full year 2026, Lululemon projects earnings of $12.10 to $12.30 per share on revenue between $11.35 billion and $11.50 billion. The consensus estimate for revenue had been $11.52 billion.
“The company’s biggest weakness is on the merchandising side. Its lack of compelling product and continued missteps have hurt brand trust while undermining its premium positioning. While lululemon claims to be bullish about the momentum it’s seen in Q1 thus far, the retailer has a lot of work to do to reclaim its cachet,” Wolff added.
Following the earnings release, Bank of America analyst Lorraine Hutchinson lowered her estimates and cut the price target on Lululemon shares to $175 from $200, saying the change was made “to reflect a more difficult transition year.”
Jefferies analyst Randal Konik offered a similarly cautious view, writing that the report was “nothing to get excited about yet.”
“China remains the lone engine and cash is ample ($1.8B), but without a credible permanent CEO, conviction stays low, and the stock looks like dead money,” he wrote.