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Investing.com -- Lululemon Athletica (NASDAQ:LULU) on Tuesday delivered a quarterly top- and bottom-line beat but provided current quarter and full year 2026 revenue guidance that fell short of expectations.
Shares of the company slipped about 2.2% in early premarket trading Wednesday.
The athleisure apparel maker’s results come at a time when consumers have largely pulled back on discretionary spending amid elevated interest rates, inflationary pressures, and geopolitical crises. Lululemon’s Americas business in particular has shown little signs of improvement.
LULU reported earnings of $5.01 per share on revenue of $3.64 billion for Q4 2025. Analysts had expected a profit of $4.79 per share on revenue of $3.58 billion.
Quarterly comparable sales improved 3%, largely driven by a 20% surge in comparable sales in the international business. Americas comparable sales fell 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 results also come at a time when it is struggling with a proxy battle mounted by its founder and one of its largest shareholders, Chip Wilson. Lululemon is also without top leadership, after Calvin McDonald stepped down as chief executive 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.
Lululemon separately said it was appointing former Levi Strauss (NYSE:LEVI) top boss Chip Bergh to its board.
Going back to LULU’s earnings and looking at its guidance, the firm sees Q1 2026 earnings of $1.63 to $1.68 per share on revenue of $2.40 billion to $2.43 billion. The consensus estimates were a profit of $2.09 per share on revenue of $2.474 billion.
For the full year 2026, Lululemon sees earnings of $12.10 to $12.30 per share on revenue of $11.35 billion to $11.50 billion. The top-line estimate was $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 report, Bank of America analyst Lorraine Hutchinson cut Lululemon estimates and price target to $175 from $200 "to reflect a more difficult transition year."
Separately, Jefferies analyst Randal Konik said the print 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.
(Anuron Mitra contributed to this report.)
