The brand that practically made athleisure its own retail category is cutting growth plans amid lagging sales. 

Lululemon plans to open a net 35 new stores this year, down five locations from what it said it was planning three months earlier, and is cutting plans for nearly 40% of its pop-up stores, management said during a second-quarter earnings call reporting flagging revenue. 

“We’re taking a very measured approach to store expansion,” interim co-CEO Meghan Frank said on the earnings call earlier this month.

There was still “tremendous opportunity” to expand in China, but in North America, “we just have a handful of new store openings this year, half of which are pop-up conversions, where we've really tested that market and it has productivity that supports a full-time location,” she said. 

The reduced store openings, which include cutting 25 pop-up locations from its annual plans, down to a net 65 activations, were announced Friday along with a 12% drop in North American sales and the firm’s second reduction in full-year guidance this year. 

Revenue in the Americas was down 8% year-over-year, double the slowdown in net revenue globally, and global profits slipped 1% to $1.5B, including roughly $135M in tariff refunds from the federal government. 

Shares in the brand's stock slipped 20% in trading Friday and were largely flat early Monday. Lululemon management repurchased $330M in stock over the quarter, but the stock has still lost more than half its value this year. 

Heidi O’Neill, board member at Hyatt Hotels and a former executive at Levi Strauss & Co., started as CEO at Lululemon on Tuesday, following her selection to the top spot and a board seat in April. Frank and interim co-CEO André Maestrini were expected to return to their prior roles in senior leadership, according to an April statement. 

Lululemon is losing market share to trendier competitors, and O’Neill is taking the helm when the company is “in a worse position than when she accepted the job,” Sky Canaves, a principal analyst at research firm Emarketer, told CNN.

The more deliberate expansion strategy is likely to extend into next year, Frank said on the earnings call. 

“We're just taking a hard look at everything, given current performance of business,” she said. 

Consumers have also started to pull back spending for the first time this year.

U.S. retail sales fell 0.6% in July compared to the previous month, the first decline since October 2025, as consumers became more pessimistic about the future of the economy. 

A lack of significant new construction has helped the retail real estate segment hold on to relatively tight fundamentals, despite the slowdown in spending and a handful of high-profile bankruptcies, according to JLL’s quarterly sector report. 

The Chapter 11 bankruptcy in January of the parent company of Saks Fifth Avenue and Neiman Marcus was one of the highest-profile bankruptcies this year. The brand reorganized and emerged in June with a new structure, fewer stores and a strictly luxury focus.