lululemon athletica inc. (LULU Quick QuoteLULU - Free Report) used its first-quarter 2026 earnings call to address a sharp moderation in sales trends that emerged late in the quarter, prompting a reduction to its full-year outlook.

Management pointed to brand-related disruptions and uneven product launch performance as key factors behind the slowdown, while outlining actions aimed at restoring momentum in North America and sustaining international growth.

LULU Cuts Outlook as Trends Weaken

Interim Co-CEO and CFO Meghan Frank said the company entered the year with encouraging signs but encountered softer demand toward the end of the first quarter and into the second quarter.

The company posted first-quarter revenues of $2.47 billion, representing a 4% year-over-year increase, while earnings per share came in at $1.69. Both metrics surpassed the Zacks Consensus Estimate, with revenues exceeding expectations of $2.43 billion and earnings topping the forecast of $1.67 by approximately 1.3%.

lululemon athletica inc. Price, Consensus and EPS Surprise

lululemon athletica inc. price-consensus-eps-surprise-chart | lululemon athletica inc. Quote

Despite the quarterly beat, management lowered its 2026 outlook. Revenues are now expected between $11 billion and $11.15 billion, representing flat to down 1% growth from 2025, while earnings per share are projected between $10.95 and $11.15.

Lululemon Identifies Two Key Headwinds

Frank said the company’s analysis pointed to two primary drivers behind the recent slowdown.

First, spikes in negative media and social-media commentary weighed on traffic and overall sales performance. Management said the issue affected both the United States and China and became most visible in late April and early May.

Second, several recent product launches failed to generate the expected level of consumer response. While some new introductions performed well, the company acknowledged that not all product initiatives delivered the anticipated lift across the broader assortment.

LULU Focuses on Product Speed and Innovation

Management emphasized that product remains the centerpiece of its recovery strategy.

Frank highlighted strong guest response to updates within key franchises such as Fast & Free, Swiftly and Metal Vent, as well as newer offerings including Daydrift and Define. However, the company said its recent “new look of yoga” campaign did not translate into the broader sales acceleration it expected.

To improve responsiveness, lululemon is increasing chase production volume by 20% this year and shortening product development timelines. Management said development cycles have already been reduced to roughly 15 to 16 months from as much as 24 months and are targeted to reach 12 to 14 months over time.

International Markets Remain a Bright Spot

While North America continues to face pressure, international operations remain a major source of growth.

China Mainland revenues increased 30% in the quarter, while management maintained its expectation for approximately 20% growth in the market for the full year. Interim Co-CEO and President Andre Maestrini said guest engagement remains strong through community events and brand activations despite temporary disruption from negative commentary.

Outside China, revenues in the Rest of World segment rose 13%. Maestrini highlighted continued opportunities across APAC and EMEA and noted that lululemon recently opened its first store in Greece and plans to enter India later this year through a franchise partnership.

Analysts Press Management on Product and Traffic

Several analysts focused their questions on product execution and the abrupt decline in traffic.

A Raymond James analyst asked whether recent product challenges could spread internationally. Maestrini responded that international markets continue to benefit from strong demand for core franchises while also supporting a broader mix of new products.

A JPMorgan analyst sought clarification on the North American slowdown. Frank said February and March performed well before trends weakened in late April. She emphasized that management is not assuming significant benefits from ongoing corrective actions in its current guidance, leaving room for improvement if initiatives gain traction.

Lululemon Steps Up Brand Investments

Management outlined a broader effort to rebuild brand momentum.

The company plans to increase marketing spending, expand community-based events and pursue more product collaborations and experiential activations. Upcoming initiatives include the return of the SeaWheeze Half Marathon in Vancouver and expanded yoga-focused programming across key markets.

Executives also highlighted operational initiatives aimed at improving efficiency, including supply-chain optimization, procurement savings and greater use of AI-powered systems across the enterprise.

Management Sees Long-Term Opportunity Despite Challenges

Throughout the call, executives maintained that the recent slowdown does not alter the company's long-term growth opportunity.

Management repeatedly emphasized discipline, product innovation, guest engagement and international expansion as the core pillars of its strategy. The company also noted that inventory units were down approximately 4% year over year, giving it flexibility to chase successful products more aggressively.

While near-term visibility remains constrained by softer North American demand, management signaled confidence that ongoing operational and brand-building initiatives can support a return to stronger performance over time.

What the Zacks Signals Indicate

LULU currently carries a Zacks Rank #3 (Hold), indicating a more balanced outlook based on earnings estimate revisions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock also holds Value Score A, Growth Score B, Momentum Score A and VGM Score A. Under the Zacks framework, strong Style Scores can help identify attractive value, growth and momentum characteristics, particularly when paired with favorable Zacks Ranks. Investors should note that the Zacks Rank can change following future estimate revisions as analysts reassess the company’s outlook after the latest results.