Lululemon eyes key growth market and it's not the U.S.

Lululemon eyes key growth market and it's not the U.S. Aditya Raghunath Mon, June 8, 2026 at 6:17 AM GMT+7 4 min read LULU Over the past three decades, Lululemon has gone from a niche yoga-pants label to a mall anchor. For most of that run, U.S. sales drove the story. The brand that built its name on American fitness studios and suburban storefronts is now leaning hard on a market half a world away. And the latest numbers show why. Lululemon (LULU) sits in a tricky spot. Its leggings and jackets cost a premium, and shoppers only pay up when they feel good about spending. Right now, many American shoppers don't. In the first quarter (ended May 3), total revenue rose 4% to $2.5 billion. But that headline number hides a split. In the U.S. specifically, sales dropped 4%. Comparable sales in the Americas, a measure that strips out new stores, slid 6% on a constant-dollar basis. Translation: existing U.S. stores sold less than they did a year ago. Profit took a bigger hit, as Lululemon reported adjusted earnings of $1.69 per share, down from $2.60 per share in the year-ago period. You won’t believe what Coca-Cola just did with its coffee brand Costco reveals a new approach that could reshape the chain Shoppers furious at grocery chain’s new anti‑theft rule Gross margin fell 410 basis points to 54.2%, primarily due to tariffs and markdowns. Interim Co-CEO Meghan Frank pointed to two culprits during the earnings call. First, a wave of negative media and social media commentary hurt store traffic. Second, some new product launches simply didn't land. "Not all of our product launches have met our expectations," Frank said. She added that a recent "new look of yoga" campaign drew interest but failed to lift the rest of the lineup. For some good news, Lululemon looks to China, where China Mainland revenue jumped 30% in the quarter, or 23% after adjusting for currency swings. Comparable sales there rose 13% on a constant-dollar basis. A shift in the timing of the Chinese New Year added roughly eight percentage points to the figure. Even so, the gap with the U.S. is striking. Put plainly: while American shoppers pulled back, Chinese shoppers leaned in. Lululemon's China Mainland segment posted a 42.4% operating margin last quarter, making it the company’s most profitable region by a wide margin. Related: One of the world’s largest fashion retailer closes 106 stores For the full year, Lululemon expects China to grow about 20% and expects North America to fall in the high single digits. The athleisure giant is putting its money where its forecast is. Of the 25 to 30 international stores planned for 2026, the majority will open in China, the company said. Lululemon ended the quarter with 173 stores there. It's also spending on splashy events to build buzz. Last week, more than 2,000 guests practiced yoga on the Great Wall of China at a flagship brand event, Co-CEO Andre Maestrini said on the call. A sixth annual "Summer Sweat Games" run-and-train series kicks off later this summer. China wasn't completely immune to the noise, though. Frank said negative commentary hit the market hardest in late April and early May, then faded. "As the brand noise has begun to dissipate, we continue to engage with guests in new and unique ways.” The broader picture is one of a company in transition. Lululemon cut its full-year revenue outlook to a range of $11 billion to $11.15 billion. That's flat to down 1% from last year. It also lowered its earnings forecast to $10.95-$11.15 per share, down from $13.26 per share in 2025. There's a leadership change coming, too. Incoming CEO Heidi O'Neill joins in September, after a stretch of interim co-CEOs. To fight the U.S. slump, the company is chasing 20% more product volume than last year. That lets it restock hot sellers faster. It's also reducing store clutter by trimming 15% of the items on display, so new styles stand out. And it's spending more to win attention. Marketing expenses will rise to roughly 6%-6.5% of sales, up from 5.6% last year. Shoppers have noticed Lululemon's stores feel cleaner and less crowded with product than they did a year ago. That's by design. Whether that's enough to revive the American business is the open question. For now, the company's clearest growth engine isn't at home. It's in China. Related: Lululemon brings back leggings after backlash, warns customers This story was originally published by TheStreet on Jun 7, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.

Lululemon eyes key growth market and it's not the U.S.

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Lululemon eyes key growth market and it's not the U.S.

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