Lululemon experienced a significant equity decline after delivering weak financial results for its second fiscal quarter and lowering guidance for the remainder of the year. The company reported a 4% decrease in revenue and a 9% decline in comparable sales during the period. This marked the continuation of operational challenges that had prompted the retailer to trim expectations in the prior quarter as well.
Interim Chief Executive Meghan Frank attributed part of the weakness to negative social media sentiment that impacted second-quarter performance. The company also encountered a steeper-than-anticipated pullback in major product categories, notably leggings. Frank noted that while certain new products and activations had generated positive customer responses, overall product launch reception remained uneven, and the company faced continued headwinds in its two largest markets.
Looking ahead, the company adjusted its financial expectations downward. For the third fiscal quarter, Lululemon projected revenue between $2.29 billion and $2.32 billion, representing an estimated 10% to 11% decline year-over-year, with per-share earnings anticipated between 93 cents and 98 cents. Full-year net revenue guidance was reduced to a range of $10.35 billion to $10.5 billion, reflecting a 5% to 7% decline from prior-year levels, down considerably from previous guidance of $11 billion to $11.15 billion. The company also lowered full-year earnings guidance to $9.48 to $9.73 per share from prior guidance of $10.95 to $11.15 per share, though this revised outlook incorporates a boost from tariff refunds.
The company reported second-quarter net income of $329.2 million, or $2.92 per share, compared with $370.9 million, or $3.10 per share, in the prior-year period. Gross profit decreased 1% to $1.5 billion while gross margin expanded 5.6%, supported by a $134.5 million tariff refund. Management indicated plans to introduce new styles and optimize inventory levels in an effort to restore sales growth momentum. Leadership changes are also underway, with new Chief Executive Heidi O’Neill scheduled to assume the role in the coming week.
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