Lululemon experienced a significant stock decline following the release of second fiscal quarter results that fell short of expectations. The company reported revenue that contracted 4% and comparable sales that decreased 9% for the period, marking another challenging quarter for the retailer following a guidance reduction in the previous quarter.
Interim CEO Meghan Frank attributed some of the performance decline to negative social media commentary and a steeper-than-anticipated slowdown in key product categories, particularly leggings. Frank noted that while the company has seen favorable responses to certain activations and newer product offerings, overall product launch reception has remained uneven, with continued competitive pressures evident in the retailer’s two largest markets.
Looking ahead, Lululemon adjusted its financial expectations downward. For the upcoming third fiscal quarter, the company projects revenue between $2.29 billion and $2.32 billion, representing a decline of approximately 10% to 11% compared to the prior year, with earnings per share anticipated between 93 cents and 98 cents. For the full year, management now expects net revenue between $10.35 billion and $10.5 billion, a 5% to 7% decline from prior guidance of $11 billion to $11.15 billion, while full-year earnings per share guidance dropped to between $9.48 and $9.73 from the previous $10.95 to $11.15 range.
For the second fiscal quarter, Lululemon reported net income of $329.2 million, or $2.92 per share, down from $370.9 million, or $3.10 per share, in the comparable prior-year period. Gross profit declined 1% to $1.5 billion, though gross margin expanded 5.6% as a result of a $134.5 million tariff refund. Management indicated its strategy going forward involves introducing new product styles and reducing inventory levels to achieve renewed sales expansion.
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