Lululemon is facing a deeper slowdown in its core business as weaker demand and intensifying competition pressure sales in North America. The athletic-apparel company’s latest forecast reduction adds to concerns about its ability to restore brand momentum at a time when consumers remain selective and newer rivals such as Alo Yoga and Vuori continue gaining attention.

Revenue Declines as Core Sales Weaken

Lululemon reported second-quarter revenue of $2.42 billion for the period ended August 2, down 4% from a year earlier and below analysts’ expectations of approximately $2.46 billion. Comparable sales declined 9%, highlighting weakness beyond the headline revenue figure. Sales in the Americas fell 8%, while international revenue increased 4%, showing that the slowdown is particularly concentrated in the company’s most important market.

Net income declined to $329.2 million, or $2.92 per diluted share, from $370.9 million, or $3.10 per share, a year earlier. The earnings figure benefited from a $134.5 million tariff refund and related interest, equivalent to about 86 cents per share, making the underlying sales weakness more important for investors assessing the quarter.

Full-Year Outlook Takes Another Hit

Lululemon now expects fiscal 2026 revenue of $10.35 billion to $10.5 billion, representing a 5% to 7% decline. That compares with its previous forecast of revenue remaining flat or declining by as much as 1%, marking another substantial reduction in expectations.

The company also lowered its full-year adjusted earnings-per-share outlook to $9.48-$9.73, compared with its previous forecast of $10.95-$11.15. For the third quarter, Lululemon expects revenue of approximately $2.29 billion to $2.32 billion, indicating that management does not expect a rapid recovery in the near term.

The weaker outlook reflects concerns about product momentum and consumer response. Sales of the company’s signature leggings have reportedly declined by about 20%, while the broader shift toward looser-fitting athletic apparel illustrates the changing preferences Lululemon must address.

New Leadership Faces a Difficult Reset

The results arrive just days before Heidi O’Neill, a former Nike executive, takes over as Lululemon’s new CEO. Her immediate challenge will be to rebuild momentum in the Americas while strengthening product innovation and marketing without undermining the premium positioning that has historically supported the brand’s growth.

Lululemon has already reduced its store-opening plans for the year to 35 locations from an earlier target of 40, signaling a more cautious approach to expansion. At the same time, competition from newer athletic and lifestyle brands is increasing pressure on the company to refresh its product assortment and reconnect with consumers.

The sharp share-price reaction shows how much investor expectations have shifted around Lululemon. The stock fell about 18% in extended trading following the results, adding to a prolonged decline. Going forward, investors will be watching whether O’Neill can stabilize North American sales, improve product demand and restore growth while controlling costs. The pace of recovery in comparable sales, international expansion and the company’s ability to regain relevance among younger consumers will be central to determining whether the current downturn is cyclical or reflects a deeper change in Lululemon’s competitive position.