Lululemon, well-known for its luxurious athletic put on, is struggling to emerge from a tough patch with shoppers, who’ve switched gears in latest months.
As many shoppers face monetary pressure amid inflation and better prices of residing, Lululemon, which sells attire at costs exceeding $100, has been struggling to spice up its gross sales.
In the course of the third quarter of this 12 months, foot visitors in Lululemon shops elevated by 4.2% 12 months over 12 months, in line with latest knowledge from Placer.ai. Nevertheless, Lululemon revealed in its newest earnings report that its comparable gross sales within the Americas decreased by 5% 12 months over 12 months in the course of the quarter.
As gross sales dropped, Lululemon’s web income within the Americas decreased by 2%. The decline in gross sales happens throughout a interval when the corporate is dealing with elevated competitors from athletic attire manufacturers equivalent to Alo Yoga and Vuori, which have been increasing their retail presence.
Nike, one other high Lululemon rival, additionally just lately revealed a brand new partnership with Skims, a shapewear model based by billionaire socialite Kim Kardashian, leading to seven new activewear collections that launched in September.
Lululemon’s poor gross sales efficiency additionally comes after it shared in September that it’s rolling out “modest price increases” on a small portion of its product assortment as a result of tariffs, a change that may proceed to roll out over the following few months.
Lululemon’s gross sales have just lately sagged.
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Lululemon sees shift in buyer conduct
Throughout an earnings name on Dec. 12, Lululemon CEO Calvin McDonald stated the attire market is dealing with headwinds as client conduct shifts.
“In terms of the flow-through and what we’ve seen in the overall marketplace, we continue to see sort of pressure in the apparel space,” stated McDonald. “We held share in premium athletic and lost some slight share in the performance apparel as we see guest behavior and trading down.”
He stated that whereas client conduct stays “uncertain,” many proceed to hunt for worth.
“We’re seeing a little bit in terms of how they’re responding to the promotional activity in the marketplace today, and they’re definitely looking for ways in which they can save in value,” stated McDonald. “And it’s behavior we’ve seen throughout the year and continued into Q3 (the third quarter of this year).”
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Lululemon Chief Monetary Officer Meghan Frank stated in the course of the name that whereas August was the corporate’s greatest month with client demand, its weakest month was October. It additionally noticed demand dip after “a strong Thanksgiving period.”
“We have seen some pullback in demand post-Thanksgiving in terms of traffic,” stated Frank.
The decline in client demand comes at a time when shoppers nationwide have been extra cautious about their spending as tariffs elevate considerations in regards to the state of the U.S. financial system, in line with a latest survey from Numerator.
How U.S. shoppers are battling tariffs in 2025:
- Roughly 87% of shoppers are involved in regards to the impression of tariffs on their funds or procuring habits, whereas 63% are anxious that tariffs will elevate costs of on a regular basis items.
- Particularly, about 30% of shoppers are involved about tariff-related worth will increase impacting the attire market.
- Additionally, 82% of shoppers plan to alter their procuring habits in response to tariffs, which incorporates slicing again on nonessential spending, trying to find gross sales or coupons, delaying nonessential or big-ticket purchases and switching to lower-priced retailers or low cost shops.
- As well as, 77% are involved about the potential for arecessionin 2026.
Supply: Numerator
“Changes in consumer sentiment are a leading indicator for changes in purchasing behaviors, and if consumers remain this pessimistic about the future of the U.S. economy, we can expect cutbacks in consumption going forward and a potential recession later this year,” stated Numerator Chief Economist Leo Feler in a press release in April.
Lululemon hopes a significant product change will increase gross sales
Frank stated that “sales haven’t met our expectations” this 12 months, and that Lululemon can be targeted on bringing “product newness and innovation” to a number of clothes classes in its shops to win again prospects.
“From a product innovation perspective, our process always begins with research, really focusing on solving for the unmet needs,” stated Frank. “And I believe the pipeline has a lot of those solutions, both across our activity as we continue to put our performance activity categories initiatives first across run, train, yoga, golf and tennis. You’ll see a lot of innovation across all five of those activities.”
She additionally stated that the corporate will improve its new fashion penetration to 35% whereas it scales again its total product assortment.
“We plan to reduce the density of our assortment on a local basis to better highlight styles that are most relevant,” stated Frank. “This will enable improved visual merchandising for the styles we know are most important to the guests in each local market.”
Whereas Lululemon focuses on “newness,” extra shoppers have been opting to buy secondhand clothes as they face financial challenges.
In accordance with a latest survey from ThredUp and GlobalData, the U.S. secondhand attire market grew by 14% in 2024, which is its strongest annual development since 2021. The market is predicted to achieve $74 billion by 2029.
Why U.S. shoppers are shopping for secondhand attire:
- Roughly 59% of shoppers stated that if tariffs make costs for attire improve, they’ll store for extra inexpensive choices equivalent to secondhand garments.
- Additionally, 34% of shoppers stated that they plan to spend their attire finances on secondhand within the subsequent 12 months.
- Moreover, 46% of shoppers say if they will discover an merchandise secondhand, they gained’t purchase it new.
- About 48% stated that personalization, improved search and discovery make procuring secondhand attire as simple as procuring new.
Sources: ThredUp, GlobalData
“Resale continues to outpace the broader retail sector, with online resale in particular driving the sector’s growth,” stated ThredUp GlobalData Managing Director Neil Saunders in a press release.
“Shoppers are prioritizing quality as resale value becomes an increasingly important factor in purchasing decisions, and retailers are evolving their secondhand offerings to meet consumer demand with new avenues like social commerce, further driving adoption and preference for secondhand,” he stated.
Lululemon makes sudden management change
As Lululemon shifts its technique amid struggles with gross sales, the corporate has additionally just lately introduced plans to exchange its CEO.
McDonald will formally step down as CEO of Lululemon and member of the corporate’s board of administrators on Jan. 31, after seven years of serving in each positions, in line with a latest press launch.
He’ll function a senior advisor to the corporate by March 31, 2026. Whereas the board searches for the corporate’s subsequent CEO, Frank and Lululemon Chief Business Officer André Maestrini will function interim co-CEOs after McDonald formally steps down.
“Serving as CEO of Lululemon has been the highlight of my career, and I am incredibly proud of everything our team has accomplished over the last seven years,” stated McDonald within the press launch.
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“Together, we have transformed the athletic apparel industry and the opportunity ahead for Lululemon is substantial,” he stated. “I believe the outstanding product pipeline we’ve built, and action plan we’ve put into place, will yield positive results, and deliver value to shareholders in the months and years ahead.”
In a press release, Lululemon founder Chip Wilson claimed that the management change is a “tremendous failure” by the corporate’s board.
“As one of the largest active shareholders of Lululemon, I am deeply concerned about what appears to be a tremendous failure by the Board to competently plan for the future and manage an effective succession process,” said Wilson.
“This latest failure in my opinion only amplifies the urgency the company faces and the obvious need for the CEO search to be led by new, independent directors with real experience,” he continued.
Wilson also said that after “years of poor decisions” that eroded the Lululemon brand, the company “needs revitalization and an infusion of new skills to get back to being a product-first company that creates real, long-term shareholder value.”
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