Lululemon reported fourth-quarter revenue of $3.64 billion and diluted earnings per share of $5.01 on March 17, 2026, beating analyst estimates on both counts. The results were overshadowed almost immediately by a 2026 outlook that fell short of expectations on every major metric, sending shares down roughly 8% in premarket trading on March 18.
- Lululemon expects tariffs to cost the company $380 million in fiscal 2026, up from $275 million in 2025, with a net impact of $220 million after mitigation.
- Americas same-store sales have not grown in approximately two years, and Lululemon projects a further 1% to 3% decline in 2026.
- As of March 18, 2026, shares are down roughly 23% year to date and approximately 52% over the past 12 months, trading near six-year lows.
What Lululemon’s 2026 Guidance Reveals
Full-year revenue guidance came in at $11.35 billion to $11.50 billion, below the Wall Street consensus of $11.53 billion, according to CNBC’s reporting. Diluted earnings per share are expected to land between $12.10 and $12.30, missing the analyst estimate of $12.58.
First-quarter guidance was equally soft. The company projected Q1 revenue of $2.40 billion to $2.43 billion against expectations of $2.47 billion, with per-share earnings of $1.63 to $1.68 versus a $2.07 consensus.
Gross margin dropped 550 basis points to 54.9% in Q4, and inventory climbed 18% to $1.7 billion. Interim co-CEO Meghan Frank said the company was focused on increasing “full-price sales” and improving product “newness” in its assortment from 23% to 35%.
Tariffs and the Americas Sales Slump
Lululemon now expects tariffs to cost $380 million on a gross basis in 2026, up from $275 million in 2025, according to the company’s earnings call. After mitigation efforts, the net hit is projected at $220 million, up from $213 million the prior year. The rising cost of tariffs continues to squeeze margins across the retail sector.
Americas revenue declined 4% in Q4, marking nearly two consecutive years without same-store sales growth in the company’s largest region. Management projected another year of Americas declines in 2026, estimating sales will fall between 1% and 3%. International revenue, particularly in China, provided a counterweight, jumping 17% in the quarter with comparable sales up 20%.
Leadership Vacuum and Founder Proxy Battle
CEO Calvin McDonald exited on January 31, 2026, leaving Meghan Frank and André Maestrini as interim co-CEOs while the board searches for a permanent replacement. Founder Chip Wilson, who started Lululemon in 1998, has nominated three director candidates and publicly criticized the board for what he called “governance deficiencies,” according to Benzinga.
Board member David Mussafer will not stand for re-election at the 2026 shareholder meeting, which Wilson’s camp considers a partial win. Former Levi Strauss CEO Chip Bergh was appointed to the board to replace Mussafer, a move the board described as adding an “industry leader” at a “pivotal time.”
What This Means for the Retail Sector
Lululemon’s struggles reflect broader pressure on mid-to-premium retail brands navigating tariff costs, shifting consumer preferences, and intensifying competition. On Holding posted 28% revenue growth in its most recent quarter, and Deckers raised its HOKA revenue outlook to $5.425 billion. Nike is also targeting the premium yoga segment under CEO Elliott Hill.
For retail entrepreneurs, the tariff numbers are telling. If a company generating $11 billion in annual revenue is absorbing a $380 million tariff hit, smaller brands with thinner margins face proportionally steeper challenges. The continued decline in Americas consumer demand adds another layer of uncertainty heading into the second half of 2026.
Frequently Asked Questions
Why Did Lululemon Stock Drop After Q4 Earnings?
Lululemon stock dropped approximately 8% on March 18, 2026, because the company issued 2026 guidance below analyst expectations despite beating Q4 revenue and earnings estimates. The weak outlook cited $380 million in tariff costs, declining Americas same-store sales, and margin pressure from leadership transitions.
How Much Will Tariffs Cost Lululemon in 2026?
Lululemon expects tariffs to cost the company $380 million on a gross basis in 2026, up from $275 million in 2025. After mitigation efforts, the net impact is projected at $220 million.
What Is Lululemon’s Revenue Guidance for 2026?
Lululemon projects 2026 revenue between $11.35 billion and $11.50 billion, below the analyst consensus estimate of $11.53 billion. Full-year earnings per share guidance of $12.10 to $12.30 also missed the expected $12.58.
