Lululemon Plunges 11% After Guidance Cut as U.S. Weakness Tests Turnaround Plan

Lululemon Athletica is back under pressure.

The stock closed at $124.92, then fell to about $110.80 after hours, down more than 11%, after the company cut its full-year outlook. The selloff came despite a small first-quarter beat.

Revenue rose to $2.47 billion, topping estimates, while EPS came in at $1.69, in line with expectations. But investors focused on the reset. Lululemon now expects FY2026 revenue of $11.0 billion to $11.15 billion, down from $11.35 billion to $11.50 billion. EPS guidance fell to $10.95 to $11.15, from $12.10 to $12.30.

The core problem remains North America. Americas comparable sales fell 5%, while international comparable sales rose 13%. China remains a bright spot, but it is not yet large enough to offset weakness in Lululemon’s biggest market.

Why LULU Stock Sold Off After Lululemon Earnings Release

Key pressure points:

• Weak U.S. demand
• Soft product launches
• More markdown risk
• Higher tariff costs
• Gross margin pressure
• CEO transition uncertainty
• Negative EPS revisions

Gross margin also remains a major concern. Management expects Q2 gross margin to fall by about 410 basis points, driven by tariffs, store investments, distribution costs, and markdowns.

Technical Analysis: LULU Remains in a Clear Downtrend

The technical setup is weak.

LULU trades below nearly every major moving average:

RSI at 37.85 shows weak momentum, but not deep oversold conditions. MACD remains negative at -3.81, suggesting the broader trend is still damaged, even if short-term relief rallies are possible.

Key Support and Resistance Levels for LULU Stock

A rebound above $125-$130 would show early stabilization. A break below $110 could open the path toward $100.

Lululemon (LULU) Stock’s Long-Term Outlook

Lululemon still has strong brand equity, global expansion potential, and a profitable business model. But the market is no longer valuing it as a flawless premium growth story.

The bull case depends on:

• North America stabilizing
• Product innovation improving
• Tariff pressure easing
• New CEO Heidi O’Neill restoring confidence
• China and international markets sustaining growth

For now, LULU looks like a turnaround stock, not a momentum stock. The valuation is cheaper, with a P/E near 8.7, but the lower multiple reflects real execution risk.