Lululemon Athletica's stock plummeted 11.06% in after-hours trading on Thursday, following the release of its first-quarter fiscal 2026 earnings report. The sharp decline came as investors reacted negatively to the athletic apparel maker's significantly reduced full-year outlook and persistent challenges in its key North American market.

The company slashed its annual revenue forecast, now expecting sales to be flat to down 1% compared to its previous projection of 2% to 4% growth. Lululemon also cut its earnings per share guidance to a range of $10.95 to $11.15, down from the prior range of $12.10 to $12.30. Management cited multiple headwinds including negative commentary around the brand, a lackluster response to new product launches, and higher tariff costs that are pressuring margins.

Lululemon's struggles are particularly pronounced in North America, where net revenue decreased 3% in the first quarter. The company acknowledged that product launches, including a new line of yoga apparel, have not generated the anticipated customer response or provided the expected "halo effect" on other product categories. These challenges come amid a recent proxy fight settlement with founder Chip Wilson, whose public criticism of the company has contributed to brand headwinds that management says have impacted sales trends.