Lululemon May Cut Annual Earnings Outlook Amid Weak US, China Sales, Warns UBS

UBS expects Lululemon to reduce its fiscal 2026 earnings forecast by around $1.25 per share, according to The Fly.

• Lulu initially forecast FY2026 earnings in the $12.10 to $12.30 per share range before lowering it to $10.95 to $11.15 per share.
• UBS said it sees “limited near-term catalysts” but the “already-bearish sentiment” may be reflected in the stock’s low valuation.
• The athleisure company is scheduled to report its second-quarter earnings on Sept. 3, 2026.

Continued weakness in Lululemon Athletica’s (LULU) two largest markets could lead the athleisure company to reduce its full-year 2026 earnings guidance again, UBS said.

The firm expects Lululemon to reduce its fiscal 2026 earnings forecast by around $1.25 per share, to a range of $9.70 to $9.90, amid weak sales in China and the U.S.

If this is the case, it would mark the second cut to Lululemon’s 2026 earnings outlook. Lulu initially forecast earnings in the $12.10 to $12.30 per share range in the fourth quarter of fiscal 2025, before lowering it to $10.95 to $11.15 per share in the first quarter (Q1) of fiscal 2026.

At the time of writing, LULU shares were down 4.2% and are currently tracking a fifth monthly decline in six months.

US Business Remains Under Pressure

During the first quarter, Lululemon’s U.S. revenue fell 4%. Revenue from its Americas business declined 3%, while comparable sales dropped 5%. 

During a call with analysts after the company’s Q1 results, interim co-CEO and CFO Meghan Frank said Lululemon’s business weakened after negative media and social-media commentary hurt customer traffic and sales while some new product releases also performed below expectations.

UBS said it sees “limited near-term catalysts” but the “already-bearish sentiment” may be reflected in the stock’s low valuation. It lowered LULU’s price target to $120 from $124 and kept a ‘Neutral’ rating, according to The Fly.

Michael Burry Sees A Bargain

Despite the operating challenges, ‘The Big Short’ investor Michael Burry remains optimistic. He recently called Lululemon stock “screaming cheap.” Burry had earlier stated that investors were too pessimistic about the athletic apparel company.

Retail Expects LULU Stock To Fall After Q2 Results

Retail sentiment surrounding LULU on Stocktwits flipped to ‘neutral’ from ‘bullish’ over the past 24 hours. LULU was also among the top trending tickers at the time of writing.

One user said the stock hitting $75 to $80 was “very much possible.” It is currently trading around $118.

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LULU shares have shed more than 44% in value so far in 2026.

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