lululemon athletica inc. LULU continues to face mounting challenges across its North American business, where weakening consumer demand, inconsistent product performance and intensifying competition are undermining its recovery efforts. Sluggish store traffic, softer conversion trends and shifting consumer preferences are weighing on sales, raising concerns about the company's ability to restore growth momentum in its largest market.
In second-quarter fiscal 2026, North America revenues declined 8% year over year, with comparable sales falling 12%. U.S. revenues decreased 8%, while Canada reported an 11% decline, or 9% in constant currency. Weakness in core merchandise categories remains particularly concerning. Women's leggings sales dropped approximately 20%, reflecting the changing preferences toward looser silhouettes. Although newer styles such as Groove Wide-Leg and Align Foldover Jogger are gaining traction, their growth has yet to offset declining demand for traditional leggings.
The regional slowdown is also creating profitability challenges. Softer sales, increased markdowns and continued investments in stores, marketing and distribution infrastructure are pressuring operating leverage. Management expects North American revenues to decline in the low-double-digit range in fiscal 2026, with a mid-teens decline anticipated in the third quarter.
lululemon is responding through product innovation, tighter inventory management, localized assortments, enhanced digital experiences and increased brand investments. However, inconsistent consumer response and slower-than-expected progress suggest that its turnaround may take longer to materialize, keeping near-term growth and profitability prospects under pressure.
Are Peers NKE, RL & GIII Witnessing Similar North America Trends?
lululemon grapples with declining North American sales and shifting consumer preferences. Its industry peers NIKE, Inc. NKE, Ralph Lauren Corporation RL and G-III Apparel Group, Ltd. GIII are also navigating an evolving retail landscape, marked by changing demand patterns, heightened competition and pressure on consumer spending, although their regional performance and growth trajectories vary.
NIKE is witnessing improving momentum in North America, with revenues rising 2% year over year in first-quarter fiscal 2027, supported by strength in its performance portfolio. Robust demand across Running, Global Football and Basketball, alongside healthy wholesale sell-through, is driving regional growth. However, persistent softness in Sportswear and Jordan Brand, coupled with inventory rationalization and reduced product supply, remains concerning, potentially limiting the sustainability of the recovery.
Ralph Lauren continues to demonstrate strong momentum in North America, with first-quarter fiscal 2027 revenues increasing 13% year over year. Retail comparable sales advanced 9%, while wholesale revenues jumped 22%, partly benefiting from shipment timing. Strengthening brand desirability, robust full-price selling, reduced promotional activity and healthy digital demand are supporting regional growth. However, planned reductions in off-price distribution could moderate sales momentum in the second half.
G-III Apparel is witnessing encouraging momentum in North America, supported by resilient consumer demand and strength across its owned brands. G-III is increasingly focusing on owned brands such as Donna Karan, DKNY, Karl Lagerfeld and its newly acquired Marc Jacobs business to reduce the dependence on third-party licensing arrangements. Donna Karan recorded more than 45% sales growth, while DKNY benefited from healthy full-price selling and expanding retail distribution. Karl Lagerfeld also delivered robust regional growth, particularly in wholesale. However, declining Calvin Klein and Tommy Hilfiger licensing revenues continue to weigh on overall sales performance.
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