Lululemon shares fell 20% in premarket trading Friday following the company’s disclosure of disappointing second fiscal quarter results and reduced full-year outlook. The apparel retailer reported a 4% revenue decline and a 9% decrease in comparable sales for the quarter, continuing a pattern of challenging performance.
Interim CEO Meghan Frank attributed some of the weakness to negative social media commentary that impacted sales during the second quarter. The company also experienced a steeper-than-anticipated contraction in several core product categories, particularly leggings. Frank noted that while customer reception to certain activations and newer styles showed promise, overall response to product launches remained uneven, with continued headwinds in the company’s two largest markets.
For the third fiscal quarter, management projected revenue between $2.29 billion and $2.32 billion, representing approximately 10% to 11% decline year-over-year, with per-share earnings expected at 93 cents to 98 cents. The company cut its full-year revenue guidance to a range of $10.35 billion to $10.5 billion from prior guidance of $11 billion to $11.15 billion, reflecting a 5% to 7% decline. Full-year earnings guidance dropped to $9.48 to $9.73 per share from the previous $10.95 to $11.15 range, though this included a benefit from tariff refunds.
Second quarter net income reached $329.2 million, or $2.92 per share, down from $370.9 million, or $3.10 per share, in the prior year period. Gross profit declined 1% to $1.5 billion while gross margin expanded 5.6%, aided by $134.5 million in tariff refunds. Management indicated its focus would be on launching new styles and reducing inventory levels to return to growth. The company also noted that incoming CEO Heidi O’Neill would assume leadership the following week.
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