Lululemon’s China Growth Slows as Leggings Sales Fall 20%

What changed

lululemon’s global revenue fell 4% year on year to about $2.4 billion in its 2026 fiscal second quarter, while comparable sales declined 9%. Mainland China revenue growth slowed to 4%, from 30% in the previous quarter, and comparable sales fell 8% at constant exchange rates. Leggings sales, a signature product, dropped about 20%. China News Service reported.

The company’s shares briefly fell nearly 20% after the results, reaching an eight-year low and standing about 80% below their late-2023 peak. Lululemon cut its full-year revenue forecast to $10.35 billion-$10.5 billion and reduced its store-opening target to 35.

Mainland China remains its second-largest market, accounting for 19% of global revenue in the first quarter. As of August 2, lululemon had 174 directly operated mainland stores, 15 more than a year earlier. However, weaker existing-store sales have offset part of the contribution from new locations.

The report attributes the slowdown to intensified competition from domestic value brands, Alo Yoga’s China entry and Vuori’s expanding presence. It also cites criticism of a May Great Wall yoga event and a June Shanghai event held during heavy rain.

Heidi O’Neill, a former Nike executive, became CEO on September 8 after months of interim leadership and several senior departures. Separately, founder Chip Wilson is reportedly handling divorce proceedings; without a prenuptial agreement, his estimated $6.1 billion fortune and nearly $1 billion in company shares could potentially enter a division process.

Why it matters

Lululemon’s China growth model relied on premium pricing, repeat purchases, community marketing and the perceived scarcity of its stores. The latest figures suggest that this combination is weakening: the company is still expanding its footprint, but individual-store productivity and demand for its most recognizable product are declining.

The competitive pressure is also changing the basis of the market. Domestic brands are taking the value segment, while Alo Yoga and Vuori are challenging lululemon in premium sportswear. That leaves the brand needing to prove that its products, community and local execution still justify a higher price.

The reported event controversies may have added to the pressure by damaging brand sentiment, although the company’s interim co-CEO and CFO identified mainland China as the main source of the revenue shortfall and pointed to concentrated negative social-media discussion as one factor.

What to watch next

• Whether O’Neill can restore growth in leggings and other core products.
• Whether mainland comparable sales recover as new stores continue opening.
• How lululemon responds to Alo Yoga, Vuori and domestic competitors without weakening its premium positioning.
• Whether the reported divorce proceedings lead to an actual transfer or division of Wilson’s shares, and whether that affects the stock.
• Whether the company maintains its reduced full-year forecast or cuts it again.