Lululemon experienced a significant stock decline following the release of disappointing financial results and reduced guidance for the remainder of the year. The athletic apparel retailer reported a 4% decrease in revenue and a comparable sales decline of 9% for the second fiscal quarter, marking another weak performance period for the company. Management attributed some of the weakness to negative social media commentary and a greater-than-expected slowdown in core product categories, particularly leggings.
Interim CEO Meghan Frank acknowledged ongoing challenges in the company’s largest markets and noted inconsistent customer responses to new product launches. While the company observed positive reactions to certain activations and newer styles, the overall reception remained mixed. Frank emphasized that management is focusing on introducing new designs and optimizing inventory levels to return to sales growth.
For the third fiscal quarter, Lululemon projected revenue between $2.29 billion and $2.32 billion, representing a 10% to 11% decline year-over-year, with anticipated earnings of 93 cents to 98 cents per share. The company significantly reduced its full-year outlook to expect 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. Full-year earnings were adjusted to $9.48 to $9.73 per share, down from previous guidance of $10.95 to $11.15 per share, though management noted the revised outlook includes benefits from tariff refunds.
The company reported second quarter net income of $329.2 million, or $2.92 per share, compared to $370.9 million, or $3.10 per share, in the prior year. Gross profit declined 1% to $1.5 billion while gross margin expanded 5.6%, supported by a $134.5 million tariff refund. The retailer faces additional leadership transition with new CEO Heidi O’Neill set to assume control, as the company works to restore growth and address ongoing market pressures.
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