Lululemon Cuts Full-Year Guidance as Competitors Circle

It’s been a rough summer for Lululemon, marred by a failed leggings launch and slumping sales in its women’s category

Lululemon has hit a snag in women’s sales in Q2 as competition in the athleisure space heats up.

The activewear company, now with 721 stores, reported a net revenue increase of 7% to $2.4 billion in the second quarter compared to Q2 2023. While Lululemon expects net revenue in the $2.340 billion to $2.365 billion range for the third quarter, representing growth of 6% to 7%, the company has lowered its net revenue outlook for 2024 between $10.375 billion to $10.475 billion – a decline from its previous $10.7 billion to $10.8 billion projection.

Lulu stock is down nearly 50% this year, but the brand isn’t alone – Nike and Under Armour are experiencing similar pains from slumping sales.

On Thursday afternoon’s earnings call with investors, Lululemon CEO Calvin McDonald cited “reduced newness” for the lack of women’s sales and enthusiasm for the brand’s assortment of athleisure , which includes $98 leggings and $128 oversized hoodies.

Despite what McDonald noted as “missed opportunities” in women’s wear, there is optimism, particularly internationally, where revenue increased by 29%. McDonald reiterated that expanding Lulu’s business outside of North America remains one of the activewear company’s largest opportunities – and stated that it remains on track to quadruple international revenue from 2021 levels by the end of 2026.

Leggings Bust

Lululemon’s chief also touched on the brand’s ‘Breezethrough leggings,’ a new product introduced this summer targeting hot yoga and other heat-intensive fitness enthusiasts. Unfortunately for Lulu, the leggings launch was a bust, and unhappy consumers lamented the Breezethrough design on social media, with accusations that the pants resulted in “long butt” – so much so that Lululemon ceased selling the pants.

“This is a test and learn, and while guests were excited by the fabric, the design didn’t meet their expectations. Listening to our guests is central to who we are and how we grow our brand, and we took the right step of pausing sales and look forward to reintroducing the fabric in the future,” McDonald said, adding that the decision had a negligible impact on the quarter.

Increasing brand awareness will remain a focal point moving forward. McDonald highlighted June’s sold-out, members-only weekend at Peloton Studios in New York that featured live classes and a 5K run. He also noted that the early feedback from Lulu’s partnerships – boutique HIIT fitness brand Barry’s and smart ring maker Oura – has been “very positive.”

“These strategies illustrate just a few other ways we engage with our guests, beyond a simple purchase transaction, offering exclusive experiences and benefits and helping them feel their best, all of which drives and deepens loyalty,” McDonald said.

Can Lululemon Compete?

Analysts have said that Lululemon remains fortified against its emerging competitors , but a looming (and growing) shadow of athleisure brands appears to be getting closer to the heels of the leggings giant.

The athleisure business doesn’t show any signs of slowing down, but some new athleisure trends could reshape consumer expectations for the long haul . Gen Z, who spend a great deal of time on social media and are invested in health and fitness, are being chased by an endless list of activewear brands looking to appeal to their aesthetic, values and attachment to the wellness scene.

Activewear companies are leaning in, positioning their brands to be more than just apparel but a lifestyle with partnerships and a presence: Alo Yoga is cultivating a sense of exclusivity with its invite-only wellness club in New York and Los Angeles; Vuori is headed on tour with Jennifer Aniston-endorsed low-impact fitness franchise Pvolve. There’s also another activewear brand circling the waters : U.K.-based Gymshark, led by the country’s youngest billionaire. The brand recently launched an eye-catching campaign – “We Do Gym,” – as it gears up to enter the U.S. market.

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