Detailed narrative
Action Plan for Growth and Value Creation
Lululemon is executing an action plan focused on strengthening the brand, reaccelerating growth, and creating shareholder value, particularly by improving the U.S. business while maintaining international momentum. The plan centers on product creation, product activation, and enterprise enablement, with a top priority of returning to full-price sales growth in North America through new product, reduced markdowns, SKU reduction, and inventory rebalancing.
Product Creation and Innovation
The company is raising product design standards, delivering consistent innovation, improving speed to market, and focusing on quality. Recent innovations include the Unrestricted Power training collection with PowerLu fabric, an updated ShowZero no-sweat technology developed with Frances Tiafoe, and the ThermoZen insulated jacket collection. The product assortment will evolve with updates to lounge/lifestyle franchises, fewer logos, a focused color palette, and an edited accessories assortment.
Product Activation and Guest Engagement
Lululemon is ramping up efforts to engage existing guests, acquire new ones, and promote innovations. Recent activations include Studio Yet, a 3-week pop-up training space in Los Angeles that saw sold-out classes and sales lift, and a 3-year sponsorship of the BNP Paribas Open tennis tournament, where 2/3 of pop-up store visitors were new to the brand.
Marketing plans will include more product-focused campaigns across social channels leveraging ambassadors and influencers.
Enterprise Enablement and Cost Management
The company is focused on creating efficiencies and managing costs, targeting meaningful savings by simplifying operations and scaling effectively. Key work streams involve increasing efficiencies in inventory management, supply chain, non-merchandise procurement, and reducing complexity through automation and AI. This vigilance continues into 2026 to offset headwinds and support growth initiatives.
North America Strategy and Full-Price Focus
In North America, strategies include returning to healthier levels of full-price sales after higher markdown penetration in 2025, enhancing the guest experience in-store and online, and increasing new style penetration. New design playbooks with less product density and activity-based merchandising are being rolled out in stores, exemplified by the new SoHo store. Online, enhancements are coming to product display pages and checkout.
International Momentum and Localized Approach
International business maintains strong momentum, particularly in China Mainland with 28% revenue growth in Q4 FY26, driven by outerwear and lounge. Localized campaigns, such as Chinese New Year with Yo-Yo Ma, are successful. South Korea is a fast-growing market with targeted celebrity endorsements.
The company continues to leverage partnerships like the Canadian Olympic and Paralympic Committees and expand its store footprint, including the 100th EMEA store in Warsaw, Poland, and planned new franchise markets in Greece, Austria, Hungary, Romania, and India.
Board and CEO Search Updates
Chip Bergh, former CEO of Levi Strauss, has been appointed to the Board of Directors, bringing deep retail and brand expertise. David Mussafer, a long-time director, will not stand for re-election. The Board is conducting a robust search process for a new CEO, meeting with qualified candidates, and will provide an update at the appropriate time⏳.