Lululemon $LULU cut its full-year revenue and profit outlook on Thursday after negative brand commentary on social media and product launches that failed to resonate with shoppers worsened an already difficult stretch for the company in North America.
The company now expects fiscal 2026 net revenue of $11 billion to $11.15 billion, representing a decline of 1% to flat compared with the prior year. That is down from previous guidance of $11.35 billion to $11.50 billion, which projected growth of 2% to 4%. Analysts were expecting full-year revenue of $11.48 billion, according to CNBC. Lululemon also cut its full-year earnings per share guidance to a range of $10.95 to $11.15, down from a prior range of $12.10 to $12.30. Analysts had expected $12.30 per share.
The current quarter looks equally bleak. Lululemon said it expects second-quarter net revenue of $2.45 billion to $2.48 billion, a decline of 3% to 2%, against analyst expectations of $2.60 billion. Earnings per share guidance of $1.76 to $1.81 fell well short of the $2.68 analysts expected.
Negative commentary spiking across social media and press coverage hurt store traffic and dragged on overall sales, interim co-CEO and CFO Meghan Frank told analysts. Among the specific triggers, Frank cited Chip Wilson's public criticism during the proxy contest and consumer concerns that had emerged around the materials used in certain products. A newly introduced yoga collection was among the launches that fell short of expectations, failing to drive the broader sales boost the company had anticipated.
The guidance cut came despite a first-quarter earnings beat. Revenue rose 4% to $2.47 billion, ahead of analyst expectations of $2.43 billion. Diluted earnings per share were $1.69, edging past expectations of $1.68. Beneath the headline beat, profitability deteriorated sharply: net income dropped to $195 million from $314.6 million in the same period last year, and gross margin compressed by 4.1 percentage points to 54.2%, as tariff exposure and heavier promotional activity took their toll. In the Americas, same-store sales posted a 5% drop, extending a losing streak that now spans five straight quarters, whereas comparable sales outside North America rose 13%.
For the North America segment, the company projected a low-double-digit revenue decline in the second quarter and a high-single-digit decline across the full fiscal year.
The results arrive as the company navigates a leadership gap. Former CEO Calvin McDonald departed in January, and Lululemon is currently run by Frank and co-CEO André Maestrini. Nike $NKE veteran Heidi O'Neill, named as the incoming CEO in April, will not take the helm until September. The late-May settlement gave Wilson the right to place two nominees on the board, while Lululemon separately committed to bringing on a third director whose background spans product development and brand building.
Lululemon stock fell more than 11% in after-hours trading following the report.