Lululemon cut its 2026 sales forecast for the second time this year as incoming CEO Heidi O'Neill prepares to take over this week.
The company now expects annual sales of $10.35B to $10.5B, down from prior guidance after second-quarter revenue declined 4%. This comes during a rough 2026 for a company still struggling to sell more clothing.
The core product problem is getting worse
Leggings, long Lululemon's signature category, fell about 20% in the second quarter as customers moved toward looser silhouettes and rivals gained share.
Lululemon's athleisure market share shrank 10 percentage points to 43.9% in August, while Alo and Vuori gained share.
"Lulu is a powerful brand but an overstretched one."
Simeon Siegel, Guggenheim
The product issues include design misses, fit concerns, and a January pullback of the $108 Get Low leggings after complaints they were see-through. Executives also said shoppers are looking for away-from-body silhouettes, which puts pressure on a category that powered Lululemon's rise.
O'Neill inherits a turnaround with little margin for delay
O'Neill, a former Nike executive, starts Sept. 8 after Lululemon's shares fell to their lowest level since May 2018.
The company also reported its first comparable-sales decline since the pandemic period and projected third-quarter revenue up to $2.32B, below analyst expectations.
Her assignment includes winning back younger shoppers, rebuilding product momentum, and navigating a founder relationship that recently moved from public criticism to a cooperation agreement.
Founder Chip Wilson agreed in May to regular meetings with O'Neill and to stop speaking negatively about the company for about 18 months. China adds another pressure point after Lululemon used a Japanese drum in a promotion, sparking backlash that hurt sales.
Analysts are pressing for a sharper product strategy, slower store growth, and fewer discounts as the brand fights to regain relevance.
"Incoming CEO O'Neill has a mountain to climb."
Jefferies analysts
There is no quick reset if the core customer has moved on from the products that made Lululemon distinctive. Lululemon still has a recognized brand and $1.4B in cash and equivalents, but investors are now paying for proof rather than potential.