Lululemon Projects Weaker 2026 Sales Amid Tariff Hikes

Lululemon Athletica Inc. has issued a fiscal year 2026 sales and earnings forecast that falls below analyst expectations, primarily attributing the revised outlook to escalating tariff costs and expenditures related to a proxy contest. 47 billion. This projection signals a more cautious financial trajectory for the upcoming year.

For the full fiscal year 2026, Lululemon projects total sales between $11.35 billion and $11.50 billion. This range is also lower than the $11.52 billion analysts had forecast, indicating broader headwinds for the company's revenue growth. The revised outlook comes despite the company reporting stronger-than-expected results for its fiscal fourth quarter, which concluded on February 1.

### Fiscal Fourth Quarter Performance Exceeds Estimates

### Fiscal Fourth Quarter Performance Exceeds Estimates

During the fourth quarter, Lululemon reported earnings per share of $5.01 on revenues of $3.64 billion. These figures surpassed Wall Street's expectations, which had projected earnings per share of $4.78 and revenues of $3.58 billion. Net income for the quarter stood at $586.9 million, or $5.01 per share.

However, this net income represents a decrease compared to the $748.4 million, or $6.14 per share, recorded in the same period of the previous year. Despite the decline in net income, sales for the quarter did see a modest increase of approximately 1% from the prior year's $3.61 billion, demonstrating some resilience in consumer demand.

### Rising Costs and Strategic Adjustments

### Rising Costs and Strategic Adjustments

The primary driver behind Lululemon's conservative 2026 forecast is a significant increase in anticipated tariff expenses. The company expects to incur $380 million in tariffs for fiscal year 2026, a substantial rise from $275 million in 2025. After mitigation efforts, the net impact of these tariffs is projected to be $220 million, directly affecting profitability.

In addition to tariffs, Lululemon is facing elevated operational costs across several areas, including marketing initiatives, labor expenses, and incentive programs. The ongoing proxy contest involving company founder Chip Wilson is also contributing to increased expenditures. In response to these financial pressures, Lululemon is implementing a strategic shift aimed at reducing its reliance on promotional activities.