Lululemon shares declined sharply in premarket trading Friday following the company’s announcement of disappointing second fiscal quarter results and a reduced outlook for the remainder of the year. The apparel retailer reported a 4% decline in revenue alongside a 9% decrease in comparable sales, marking another challenging quarter for the company that had previously cut guidance in the prior period.
Interim Chief Executive Meghan Frank attributed some of the weakness to adverse social media commentary that impacted performance during the quarter. The company also faced what it characterized as a greater-than-expected slowdown in certain core product categories, notably leggings. Frank noted that while the company observed positive customer reception to certain activations and newer designs, overall response to product launches remained uneven, with ongoing brand pressure evident in the company’s two largest markets.
Looking ahead, Lululemon provided reduced guidance for the third fiscal quarter, projecting revenue between $2.29 billion and $2.32 billion, representing a decline of 10% to 11% from the prior year period. The company anticipated earnings per share for the quarter to range from 93 cents to 98 cents. For the full year, management lowered its net revenue outlook to a range of $10.35 billion to $10.5 billion, down 5% to 7%, compared to previous guidance of $11 billion to $11.15 billion.
Earnings guidance for the full year also declined to a range of $9.48 to $9.73 per share, versus the prior guidance of $10.95 to $11.15 per share, though the company noted this outlook benefited from anticipated tariff refunds. Second quarter net income totaled $329.2 million, or $2.92 per share, compared to $370.9 million, or $3.10 per share, in the prior year. Gross profit decreased 1% to $1.5 billion, though gross margin expanded 5.6%, aided by a $134.5 million tariff refund.
Management indicated it is pursuing new product introductions and inventory optimization efforts aimed at restoring sales growth. The company is also undergoing leadership transition, with incoming CEO Heidi O’Neill set to assume control in the coming week as the retailer addresses ongoing challenges related to brand perception and customer engagement.
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