Topline
Lululemon shares plunged over 18% on Friday after the company again cut its full-year forecast in its second-quarter earnings report, pushing the retailer below $100 for the first time in years as investors digested a 9% drop in comparable sales and increasingly pessimistic outlook for 2026 revenue.
Sign for yoga clothing store Lululemon at Broadway Plaza in Walnut Creek, California, February 27, 2018. (Photo by Smith Collection/Gado/Getty Images)
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Key Facts
Lululemon’s stock fell as much as 20% in premarket trading Friday, before it recovered slightly to $99.97, a 17.90% drop, at 11:45 a.m. EDT, marking the first time the stock traded below $100 in regular market sessions since 2018.
Second-quarter revenue fell 4% to $2.4 billion, missing analysts’ $2.46 billion estimate, while comparable sales fell 9%, including a 12% decline in the Americas, though international revenue rose 4%.
Lululemon cut its full-year revenue forecast to between $10.35 billion and 10.5 billion from its prior forecast of between $11 billion and $11.15 billion, and lowered its adjusted earnings forecast to between $9.48 and $9.73 per share from between $10.95 and $11.15.
Sales of women’s apparel fell 4%, men’s apparel fell 1% and accessories and other revenue fell 13%.
Incoming CEO Heidi O’Neill starts on Tuesday, inheriting a company that has cut its full-year outlook twice this year and is forecasting another 10% to 11% revenue decline in the third quarter.
KEY BACKGROUND
Lululemon’s first-quarter results already showed a sharp decline in earnings, with comparable sales falling and the company lowering its full-year outlook. The CEO change adds another layer of uncertainty. O’Neill, a longtime Nike executive, is set to take over as Lululemon’s CEO on Tuesday, replacing interim leadership after CEO Calvin McDonald left in January.
TANGENT
Lululemon has faced several controversies over the last year as its business struggled. In April, Texas Attorney General Ken Paxton opened an investigation into whether Lululemon products contained PFAS “forever chemicals,” as well as whether they misled consumers about their safety. Lululemon has said it does not use PFAS in its current products, and completely phased them out in fiscal year 2023. In June the company also apologized after it hosted a promotional event on the Great Wall of China and used a Japanese taiko drum instead of a traditional Chinese drum.
FURTHER READING
Lululemon Faces A Growing Crisis Of Trust After Another Controversy Emerges (Forbes)
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