For this edition, we dig into Lululemon’s recent earnings reports and call transcripts and found a few things worth examining from a merchant’s point of view.
We’re focused on the Q4 2025 and Q1 2026 reporting. It is no secret that sentiment toward the brand is not favorable right now.
Our intention is not to downward-dog pile on Lululemon, but to assess it through a merchant lens and surface insights that only that point of view can produce.
Here are our top three points of analysis.
1. The Newness Quotient
We should start by saying that the term “newness” usually doesn’t mean much. In our scan of earnings information across 16 brands, it is used qualitatively, thrown into a word salad with little behind it.
Lululemon is different. It has defined the term and quantified a newness quotient for the assortment. Worth noting: we went back through past earnings calls, and both the quotient and the definition appeared only after Calvin McDonald exited as CEO.
The brand has set a goal of 35% newness in the assortment (currently sitting at 30%) and defines the term as “a net new style, not a color refresh on an existing style” and “new product never seen before by the guest.” Two things stand out. First, “a net new style” is still a broad definition. It may or may not point to a brand new product franchise. A new style could be something far more simple like the addition/deletion of a pocket.
Second, pushing to 35% newness carries risk: anything that does not resonate has to be marked down. That is a risk any brand takes when it introduces something new, but if the gap with customers is large, markdown activity could run above and beyond what is currently planned.
2. Speeding Up But Still Slow
The time-to-market and chase timelines presented in the reports and calls represent real progress. However, they are still too slow to support the goals of more newness and full-price sales.
The mainline product development timeline once ran 18 to 24 months, which is shockingly high on its own. It is now down to 15 to 16 months, with a goal of 12 to 14. We think it should be compressed more aggressively, closer to 10 months, so the brand can read the current season’s feedback before placing orders for the next one.
Assuming that all new styles run through the mainline development calendar, the math gets harder. A high newness quotient demands speed, and we are not sure if there is enough of it yet. So the questions we would press on include: How far does digital sampling actually reach? Is there a pre-approved materials library doing real work to shorten the front end? And how often are teams reworking and revisiting decisions, quietly adding time back?
Lululemon is also leaning on chase to respond faster to guests, with chase volume projected to rise 20%. Chase, along with fast-tracks and postponement for replenishment and/or reacting to market signals is an excellent approach. But the chase timeline currently sits at six to eight weeks. The brand should stive to push to three weeks to better insulate against unplanned markdowns.
As such, the question worth asking: what can be learned from the likes of Inditex and other fast-fashion players about building better processes?
The answers will be useful for Lulu.
3. What We Expect In The Assortment
So what does this assortment actually look like at the current 30% newness, 15% fewer SKUs, and 4% fewer units?
Expect more fall and winter coats in new fabrics and fashion-forward styles. The investment in new lounge fabrications could open up gifting options through the holidays. We also expect a pullback on new accessory styles in favor of more depth in best sellers, especially heading into back-to-school.
With fewer SKUs and fewer units, there will be less on the shop floor and no more of the same product merchandised in multiple spots. Whatever goes on sale will show up at an outlet or online only. If the SKU discipline holds, the floor has the potential to tell a compelling brand story, though plenty of work remains behind the scenes.
One thing to watch: increasing chase volume could mean less depth and many more new styles, which is how you get stockouts and broken sizes. The customer walks in for something specific, can’t find it, and moves on.
Lululemon is in no position to afford that.
