Lululemon announced disappointing financial results for its second fiscal quarter, with the company reporting a 4% revenue decline and a 9% decrease in comparable sales. The underperformance marked the continuation of a challenging trend, following a guidance reduction in the previous quarter. Shares declined 20% in premarket trading on the day following the announcement.
Interim CEO Meghan Frank attributed the quarter’s shortfall to negative social media sentiment that impacted customer response, as well as a sharper-than-anticipated slowdown in several key product lines, particularly leggings. While noting that customer feedback on newer styles and special promotions had been positive, Frank acknowledged that overall product launches had failed to generate consistent consumer enthusiasm and that the company faced ongoing pressure in its two largest markets.
The retailer substantially lowered its outlook for the remainder of the year. For the third fiscal quarter, Lululemon projected revenue between $2.29 billion and $2.32 billion, representing a decline of approximately 10% to 11% year-over-year, with earnings per share guidance of 93 cents to 98 cents. For the full year, the company revised its net revenue expectations to between $10.35 billion and $10.5 billion, down from prior guidance of $11 billion to $11.15 billion, reflecting a 5% to 7% decline. Full-year earnings guidance was reduced to $9.48 to $9.73 per share from the previous range of $10.95 to $11.15 per share, though this figure included the benefit of tariff refunds.
In the second quarter, net income decreased to $329.2 million, or $2.92 per share, compared to $370.9 million, or $3.10 per share, a year prior. Gross profit fell 1% to $1.5 billion, though gross margin expanded 5.6%, partly due to a $134.5 million tariff refund. Management indicated that near-term priorities include developing fresh product offerings and optimizing inventory levels to restore sales growth. The company noted that a new CEO, Heidi O’Neill, would assume leadership the following week.
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