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Lululemon plans to open a net 35 new stores in 2026, down from its previous target of 40, while cutting 25 planned pop-ups.
North American sales fell 12%, and global profit declined 1% to $1.5B, including roughly $135M in tariff refunds.
The pullback signals a more cautious retail leasing environment as consumers reduce spending and brands reassess expansion commitments.
Bisnow reports that Lululemon is scaling back its US store expansion plans as weaker sales pressure the athleisure retailer. Management said during its second-quarter earnings call that it now expects to open a net 35 new stores in 2026, five fewer than previously planned. It is also cutting 25 pop-up locations from its annual target, bringing the total to 65 activations.
The retrenchment comes as North American sales fell 12% and global profit slipped 1% to $1.5B, according to the company's Sept. 3 earnings release. The results mark the second reduction in full-year guidance this year and come as Heidi O'Neill takes over as CEO.
Lululemon's move reflects a more selective approach to physical retail rather than a full retreat from expansion. Interim co-CEO Meghan Frank said the company is taking a "very measured approach," with only a handful of new North American stores planned. About half are pop-up conversions that have already demonstrated enough productivity to support permanent locations.
China remains a major growth opportunity, while North America faces tighter scrutiny. Frank said management is reassessing expansion given current business performance, with the more cautious approach likely extending into 2027.
Lululemon's revised 2026 plan calls for 35 net new stores, down from 40. The company is also reducing its pop-up target to 65 activations, cutting 25 locations from its previous plan.
The weaker performance is concentrated in North America. Sales declined 12%, while revenue across the Americas fell 8% year-over-year. Global profit dropped 1% to $1.5B, including roughly $135M in tariff refunds. Lululemon also repurchased $330M of stock during the quarter, though its shares have lost more than half their value this year.
Lululemon's pullback comes as broader consumer spending shows signs of weakening. US retail sales fell 0.6% in July, the first monthly decline since October 2025, according to Trading Economics. The Conference Board has also reported increased consumer pessimism about the economic outlook.
Retail real estate fundamentals remain comparatively tight. JLL's quarterly US retail report points to limited new construction supporting the sector despite weaker spending and several high-profile retailer bankruptcies.
For retail landlords, Lululemon's decision reinforces the importance of store productivity as retailers reassess growth. Even established brands with significant expansion opportunities are becoming more selective about where they commit to permanent locations.
The shift could also influence leasing demand in markets where retailers are testing new locations through pop-ups before signing longer-term leases. Lululemon's emphasis on converting only productive temporary stores provides a clear example of that approach.
The company also faces a broader brand challenge. EMarketer analyst Sky Canaves told CNN that Lululemon is losing market share to trendier competitors, putting additional pressure on O'Neill as she takes over.
O'Neill became Lululemon's CEO on Sept. 8, after being selected for the role in April. Frank and interim co-CEO André Maestrini are expected to return to their previous senior leadership positions.
Management has indicated that the more deliberate expansion strategy could continue into 2027. For landlords and developers, the key question will be whether stronger sales allow Lululemon to resume expansion or keep its store pipeline constrained.
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