By Kelly Cloonan

Lululemon Athletica lowered its outlook citing recent challenges after what it described as a solid start to the fiscal year.

The athleisure company said Thursday it saw some positive signals in its latest quarter due to work to improve results in North America, its largest market, where sales continued to decline. However, Lululemon said it has been navigating headwinds more recently, and is working to take additional steps to reposition and bolster its product offerings.

"We recognize that we have more work to do," interim co-Chief Executive Officer André Maestrini said.

Lululemon now expects sales to be down to flat this year, compared with its prior forecast for growth. It also cut its profit outlook.

Shares slid about 9%, to $114.13, in after-hours trading. Through the market close the stock is down 40% year to date.

The lowered view comes after Lululemon settled a long-running dispute last week with founder Chip Wilson, who had publicly criticized the company for years and launched a proxy fight in December seeking to overhaul its board.

Under the deal, Wilson will name two new directors to Lululemon's board, and the company also agreed to add a third director with apparel product and brand expertise, subject to Wilson's approval. In exchange, Wilson agreed to an 18-month standstill and nondisparagement agreement.

Lululemon, for now, is navigating broader challenges under a new leadership team. Since CEO Calvin McDonald stepped down earlier this year, the company is being led on an interim basis by Maestrini and Chief Financial Officer Meghan Frank. Former Nike executive Heidi O'Neill is set to come in as CEO in September.

Analysts have said they don't expect any meaningful improvement to Lululemon's results until O'Neill, and the new board members, are in their roles for at least a few months.

For the full year, the company now expects net revenue to be down 1% to flat to a range of $11 billion to $11.15 billion, compared with its previous forecast for revenue growth of 2% to 4%. The company now projects earnings per share in the range of $10.95 to $11.15 for the year, down from $12.10 to $12.30 previously.

For the current quarter, Lululemon expects sales to decline 3% to 2%, to a range of $2.45 billion to $2.48 billion, and per-share earnings of $1.76 to $1.81. Analysts surveyed by FactSet forecast $2.6 billion of revenue and earnings of $2.68 on a per-share basis.

For the fiscal first quarter revenue rose, topping Wall Street's expectations. The company pointed to some positive developments, including a sequential improvement in full-price sales, as it worked to improve results in North America.

Profit came in at $195 million, or $1.69 a share, compared with $314.6 million, or $2.60 a share, a year earlier. Analysts polled by FactSet expected earnings of $1.68 a share.

Revenue rose 4% to $2.47 billion, compared with analyst estimates of $2.43 billion.

Revenue in the Americas decreased 3%, while international sales climbed 22%.

Same-store sales, which adjust for store openings and closings, ticked up 1%, compared with the 0.2% decline analysts were expecting.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

June 04, 2026 16:24 ET (20:24 GMT)

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