Lululemon‘s troubles are far from over. 

The athletic apparel retailer lowered its full-year guidance and issued a weak current-quarter outlook on Thursday as interim CEO Meghan Frank blamed “negative commentary in the media” and recent product launches that failed to wow shoppers.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top line performance,” Frank told analysts during the company’s earnings call while explaining why the company’s performance declined at the end of its fiscal first quarter. “And second, not all of our product launches have met our expectations. While we’ve had several successful launches so far this year, we’ve seen others as we start Q2 not generate the anticipated guest response.”

When pressed on what specific negative commentary led to a decline in sales, Frank pointed to Lululemon’s proxy contest with founder Chip Wilson, who was outspoken in his criticism of the brand, as well as “questions about the composition” of some of its products.

“These stories have died down and subsided,” said Frank. “But we have not yet seen a return to our pre-disruption … trends.”

She said the company is “not sitting still” and is “moving with urgency to make the necessary adjustments to reaccelerate momentum, particularly in North America.”

The company’s shares dropped 11% in extended trading following the report. Lululemon’s stock has plunged about 40% this year as of Thursday’s close.

Lululemon is now expecting fiscal 2026 sales to be between $11 billion and $11.15 billion, down from a previous range of between $11.35 billion and $11.50 billion. Analysts were expecting full-year sales of $11.48 billion, according to LSEG. 

Lululemon also cut its earnings guidance by more than $1 per share. It’s now expecting earnings per share to be between $10.95 and $11.15 for the year, down from a previous range of $12.10 to $12.30. Analysts were expecting $12.30 per share, according to LSEG. 

The current quarter doesn’t look much better. Lululemon is expecting sales to be between $2.45 billion and $2.48 billion, below expectations of $2.60 billion, according to LSEG. It’s expecting earnings per share to be between $1.76 and $1.81, well below expectations of $2.68, according to LSEG. 

While Lululemon’s guidance failed to meet forecasts, it did beat expectations on the top and bottom lines during its fiscal first quarter, albeit on expectations that have come down significantly since the retailer last reported earnings. Here’s how the company performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $1.69 vs. $1.68 expected 
• Revenue: $2.47 billion vs. $2.43 billion expected 

The company’s reported net income for the three-month period that ended May 3 was $195 million, or $1.69 per share, compared with $314.6 million, or $2.60 per share, a year earlier. 

Sales rose to $2.47 billion, up about 4% from $2.37 billion a year earlier. Comparable sales grew 1%, better than expectations of 0.4%, according to LSEG.

Lululemon’s woes have been centered on the Americas, its largest and most important region. During the quarter, comparable sales fell 5% in the market, marking the fifth straight quarter of declines. Lululemon’s overall business is still growing, but it has primarily seen that expansion in China and in other international regions, which make up a fraction of overall revenue. 

During the quarter, international sales grew 22% while international comparable sales grew 13%.

Lululemon said it expects its declines in North America to continue. It anticipates sales will fall by a low-double digit percentage in the current quarter and by a high-single digit percentage for the full year. Meanwhile, it expects China sales will rise by a mid-to-high teens percentage during the current quarter and by about 20% for the full year.

Sales have been a sore spot for Lululemon, but profitability has been an even larger challenge. During the quarter, gross margin decreased a staggering 4.1 percentage points to 54.2%, worse than expectations of 54.6%, according to StreetAccount. The company was a large beneficiary of the now defunct de minimis exemption, which allowed it to ship packages duty free across the Canadian border into the U.S., and has also been hit hard by tariffs.

With fewer people coming to its stores and website to buy workout clothes, the company has also leaned more on discounting to drive sales, which has hurt its bottom line and its reputation as a premium brand.

It’s also spent the last six months in a dramatic proxy contest with its founder, which was costly and took management’s attention away from its turnaround.

In addition to all of those struggles, Lululemon, like everyone else, has also had to contend with a new conflict in the Middle East and surging gas prices, which are also increasing costs.

The company said the decline in its gross margin during the quarter was primarily attributable to tariffs, which impacted margins by 2.8 percentage points, and discounts, which grew 0.4 percentage points. The company expects gross margin to fall by another 4.1 percentage points during the current quarter, driven by higher tariffs and store investments. It anticipates markdowns will be 0.5 percentage points higher. 

“While we continue to expect markdowns to improve modestly year over year in the second half,” said Frank. “The slower expected top line trends in Q2 will necessitate additional seasonal clearance.”

Lululemon expects its profitability challenges will moderate in the back half of the year. For the full year, the company anticipates gross margin will fall 0.9 percentage points, with markdowns flat to slightly higher. On a full-year basis, Lululemon expects to offset nearly all of its tariff impact, Frank said.  

In the three months since Lululemon last reported earnings, its made some progress on addressing some of its challenges. It hired longtime Nike veteran Heidi O’Neill to be its next CEO and settled its proxy battle with its founder. Investors are likely to be relieved Lululemon’s management team no longer has to put its focus and cash behind the proxy contest, but some are still feeling sour over O’Neill’s appointment, particularly because she won’t be able to start until September. 

Under the direction of two interim CEOs, CFO Frank and Chief Commercial Officer André Maestrini, Lululemon has been working to rebuild its product assortment and address its domestic growth challenge. But the real strategy changes won’t come until O’Neill starts. 

Given how long it takes for Lululemon to get from product idea to market, there’s concern that it’ll take even longer than expected to fix the challenges that have been weighing on its business. 

Still, Lululemon has contended that O’Neill is the right person for the job. While at Nike, O’Neill established and built Nike’s women’s business and grew it into a multibillion-dollar franchise. She also worked to reduce product lead times – experience that will serve her as Lululemon’s chief executive. Already, the company has made progress in reducing lead times from 18-to-24 months to 15-to-16 months and is working to further bring it down to between 12 and 14 months, Frank said.

India’s asset management industry is undergoing a structural transformation, with systematic investing increasingly reshaping business visibility, market behaviour, and long-term growth prospects. What was once a market-sensitive retail participation channel has evolved into a durable domestic liquidity engine, reducing dependence on volatile discretionary capital and improving earnings predictability for the sector.

The clearest evidence lies in the scale-up of systematic investment plan (SIP) inflows. Monthly SIP contributions have risen roughly tenfold over the past decade, crossing INR300 billion in FY26, with annual contributions reaching approximately INR3.5 trillion. The number of SIP accounts has expanded to more than 100 million, while SIP assets now account for nearly one-fifth of overall mutual fund assets and roughly one-third of equity-oriented assets. This marks a significant shift in the sector’s business model toward annuity-like revenue streams.

A key differentiator has been resilience across market cycles. Even during periods of sharp market correction, SIP flows have shown limited elasticity, with only modest declines during the pandemic-led shock before recovering quickly. By contrast, lump sum investments remain closely tied to sentiment, market momentum, and valuation comfort. These flows have historically accelerated during bull phases and contracted sharply during corrections, underscoring their discretionary and cyclical nature.

This divergence carries meaningful implications for the sector. Persistent SIP inflows provide a steady source of incremental demand, cushioning market drawdowns and enabling faster recoveries. For asset managers, that translates into stronger revenue visibility, improved operating leverage, and reduced dependence on episodic fund mobilization cycles.

That said, challenges remain. Lump sum participation continues to be volatile, reflecting investor timing bias and return-chasing behaviour. Market-to-market performance will still influence asset growth, particularly in equity-heavy portfolios. Income disruptions, as seen during macro stress periods, can also temporarily affect retail contribution momentum.

The medium-term outlook, however, remains constructive. Industry projections indicate total mutual fund assets could expand at over 20% CAGR through FY30, driven primarily by structurally rising systematic inflows rather than cyclical discretionary allocations. The broader structural shift toward retail-led, recurring domestic participation suggests India’s asset management sector is moving into a more mature and predictable growth phase—one less reliant on market exuberance and increasingly anchored in disciplined household financialization.

Nippon India AMC: Target Rs 1200

Nippon Life India AMC remains well-positioned as one of the fastest-growing players among top AMCs, supported by strong market share gains, especially in passive products, robust investor base, and a diversified product mix.

Continued focus on innovation, new product categories, and operating leverage is expected to support sustained growth, with regulatory yield impact likely to be largely offset. Performance in 4QFY26 was strong, with operating revenue rising 30% YoY to INR7.4b and PAT growing 29% YoY to ~INR3.8b.

QAAUM expanded 30% YoY to INR7.25t, led by strong growth in ETFs and equity. While SIP inflows saw a marginal dip due to market volatility, trends are stabilizing, with the SIP book continuing to grow. EBITDA margins improved to 68.6%, and market share increased to 8.9%.

We expect ~19% AUM CAGR and mid-teens earnings growth over FY26–28E, supported by scale benefits and stable yields, reinforcing a positive outlook and BUY stance.

ICICI Prudential AMC: Target Rs 3850

ICICI Prudential AMC remains well-positioned to benefit from rising retail participation, strong SIP traction and expanding market share across equity, hybrid and passive segments. New product launches in SIF and the transfer of ICICI Venture fund management rights provide additional structural growth levers.

Operating revenue remained in line, supported by strong QAAUM growth and stable yields, while tighter cost control lifted EBITDA margins sharply. Management expects near-term yield pressure from new TER regulations to be offset by incremental flows from SIFs and ICICI Venture.

Product diversification, expanding investor base and strong distribution should sustain growth. We estimate FY26-28 revenue/PAT CAGR of 15%/16%, with steady margin expansion.

(The author is Siddhartha Khemka, Head of Research – Wealth Management, Motilal Oswal Financial Services)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

Jefferies has downgraded Indus Towers to “underperform” and slashed its price target to Rs 375, citing emerging risks around tower contract renewals and sustained pressure from elevated capital expenditure, which could weigh on earnings growth and shareholder payouts.

The brokerage flagged that a significant portion of Indus Towers sites — around 10% — that were deployed in 2016–17 are up for renewal over the second half of calendar year 2026 and early 2027. This cluster of renewals comes at a time when industry wide tower additions are moderating, potentially intensifying competition among tower companies to retain tenants.

According to the broker, this dynamic may force Indus Towers to either offer discounts to retain clients such as Bharti Airtel and Vodafone Idea or risk losing tenancies to competitors. Even a limited discount to one operator could cascade across the entire tenant base, impacting revenues more broadly.

Jefferies has built in a conservative scenario where about 25% of such sites may not be renewed, leading to a 2-2.5% cut in revenue and EBITDA estimates for FY27 and FY28. Profit estimates have been reduced by up to 6%, reflecting both the renewal uncertainty and higher depreciation costs stemming from increased capital spending.

Capex remains a key overhang. Despite a nearly 30% decline in tower additions during the first nine months of FY26, overall capital expenditure rose sharply, driven by a surge in maintenance spending and continued investments in energy infrastructure such as solar solutions and lithium-ion batteries. Maintenance capex alone has nearly doubled year-on-year, indicating an ageing tower portfolio that will require sustained upkeep.

“Overall capex is expected to remain elevated in the range of Rs 72,000–80,000 crore annually over FY26-FY29, limiting free cash flow generation. This, in turn, is expected to cap dividend payouts, with Jefferies estimating free cash flow at only Rs 15-19 per share over FY27–FY29,” it said.

Growth outlook also appears modest. The brokerage expects Indus Towers to deliver just 4% revenue CAGR and 3% earnings growth over FY26-FY29, with EBITDA margins likely to remain largely range-bound. The limited growth visibility, combined with renewal-related risks, could restrict any meaningful re-rating in the stock.Valuation has also been adjusted downward. Jefferies has cut its target multiple to 6.5x EV/EBITDA, aligning it closer to long-term averages, and sees a downside of around 14% from current levels.

While there are potential upside triggers, such as stronger-than-expected capex from Vodafone Idea or better renewal outcomes, the near-term risk-reward remains skewed to the downside, according to the brokerage.