By Anuja Bharat Mistry and Danielle Kaye
June 4 (Reuters) - Lululemon Athletica cut its annual revenue and profit forecasts on Thursday, as the athletic apparel maker grapples with waning brand appeal and tough competition in the U.S., sending its shares down about 9% in extended trading.
Vancouver-based Lululemon, known for its pricey leggings and athleisure wear, has joined peers in bearing the brunt of muted spending on higher-margin items amid surging inflation. The macroeconomic challenges come
as the retailer struggles to win back loyal North American shoppers and revive the brand's popularity.
The company, which ended a months-long proxy fight with founder Chip Wilson in May, also faces mounting competition from upstart brands such as Alo Yoga and Vuori, which are expanding their retail presence in the U.S., as well as from players such as Maia Active and Xexymix in China.
Lululemon's first-quarter revenue in the U.S. — its biggest market — fell 4% in constant dollars, compared with a 2% increase a year ago. Quarterly revenue in the China market, however, rose 23% in constant dollars.
The retailer expects fiscal 2026 revenue to be flat to decline 1%, compared with its prior forecast of a 2% to 4% increase.
It also expects full-year earnings per share to be between $10.95 and $11.15, versus $12.10 to $12.30 projected earlier.
Investors are now focused on whether incoming CEO Heidi O'Neill can reignite sales after assuming the role in September.
Last week, Lululemon ended its boardroom battle with Wilson, agreeing to give him two board picks in exchange for his pledge to stay quiet for 18 months as a new CEO prepares to steer the company.
The resolution clears the way for O'Neill to focus on Lululemon's overlooked strength: a $1.8 billion net cash treasure chest that the Canadian company could use to invest in new products, revamp retail outlets and push into under-tapped markets.
(Reporting by Anuja Bharat Mistry in Bengaluru and Danielle Kaye in New York; Editing by Shilpi Majumdar)
