Lululemon under pressure as core market stalls despite 5% growth

Lululemon Athletica closed the 2025 fiscal year with solid growth momentum, but the balance of its business model is coming under increasing pressure. While its international business continues to expand, its core business in North America is losing momentum. At the same time, declining margins and rising inventory suggest that demand, product mix, and pricing are no longer fully in balance. Against this backdrop, the question is becoming increasingly clear: Is the current strategic direction still sufficient to keep the brand on a growth trajectory in the long term?

Wilson intensifies criticism: operational weaknesses

Accordingly, Chip Wilson has also significantly intensified his criticism recently, shifting the focus to operational weaknesses in addition to governance issues. In a statement dated March 17, 2026, the founder of Lululemon argues that there is a fundamental disconnect between brand leadership and the board’s understanding – with direct consequences for performance. He points to ongoing discounting, which he says undermines the premium positioning and ties up capital that should actually be flowing into brand building and innovation.

At the same time, he criticizes an increasing “predictability” in the product offering as well as repeated missteps in new categories. Wilson, who is also one of Lululemon’s largest individual shareholders, is particularly critical of the company’s performance in North America. According to him, comparable sales there have been stagnant or declining for seven quarters. In his view, this trend carries the risk of spreading to international markets and structurally damaging the growth story.

Persistent weakness in the key market

A look at the fourth-quarter and full-year figures supports Wilson’s position. In the Americas, revenue declined by 1 percent in 2025, while comparable sales fell by 3 percent. Lululemon generates approximately $8 billion in revenue in its by far largest market; in absolute terms, the decline amounts to a low three-digit million figure.

In Q4, the weakness accelerated further, with a 4 percent decline in revenue and comparable sales down around 2 percent. This contrasts with a continued dynamic international business: Revenue outside the Americas rose by 22 percent over the past twelve months, driven in particular by Mainland China with a 29 percent increase, while international comparable sales grew by 15 percent.

Women’s segment remains stable

At the category level, trends are more stable. The women’s segment proved comparatively robust in 2025, growing by 5 percent for the full year, while the men’s segment trailed slightly behind with a 4 percent increase. This pattern was also evident in the fourth quarter: While sales in the womenswear segment grew moderately, the men’s segment recorded a slight decline. This development underscores Lululemon’s continued strong position in its core women’s business – at the same time, it becomes clear that the targeted diversification into new categories and target groups has not yet borne fruit to the same extent.

Growth loses momentum

At the corporate level, this paints a mixed picture. Revenue grew by 5 percent to $11.1 billion in 2025, driven almost entirely by international operations. At the same time, profitability came under noticeable pressure. The gross margin fell by 260 basis points to 56.6 percent, while the operating margin declined by 380 basis points to 19.9 percent. Operating income fell by 12 percent to $2.2 billion, and net income by 13 percent to $1.58 billion. At the same time, inventory rose by 18 percent to $1.7 billion – an indicator that supply and demand are increasingly diverging. Meanwhile, the company continued its expansion, opening a net total of 44 new stores, bringing the total count to 811. Growth is thus increasingly supported by additional retail space, while the productivity of existing stores is declining.

CEO search becomes a risk

But it is not just the numbers that are worrying investors; the CEO question is also becoming a key source of uncertainty. Lululemon has not yet named a new CEO – and that is precisely what is increasingly becoming a problem. Market observers see the ongoing search as being further complicated by the simultaneously escalating proxy conflict, while the latest figures are adding to the pressure. Analysts are calling above all for clear strategic leadership, yet this is precisely what is currently lacking. Even as the board attempts to counter this by appointing former Levi Strauss CEO Chip Bergh and building additional brand and product expertise. While the market views this move as sensible, it has not yet been enough to counter the structural criticism of the board. And so the question from three months ago remains very much relevant: Who has the necessary acumen to get the U.S. business back on track?

Subdued outlook for 2026

And until that person is found, the subdued outlook underscores the mounting challenges. For 2026, Lululemon expects revenue growth of just 2 to 4 percent to $11.35 to $11.5 billion, while earnings per share are likely to drop to $12.10 to $12.30 – down from $13.26 the previous year. In doing so, the company is signaling not only a slowdown in growth momentum but also ongoing pressure on profitability.

Markets remain skeptical

This mixed picture is causing increased nervousness on the stock market. Although the shares initially reacted positively in after-hours trading, this reaction was not sustained. Investors attributed early gains to better-than-expected results, but attention soon shifted to the weak outlook and broader uncertainties. In regular trading, however, doubts prevailed once again: the weak outlook, ongoing problems in the U.S. business, and the unresolved CEO succession put pressure on the stock price. As a result, the stock remains caught between short-term hopes for stabilization and structural concerns regarding strategy and leadership.