Lululemon experienced a significant stock decline in premarket trading following the release of its second fiscal quarter results. The apparel retailer reported a 4% revenue decrease and a 9% decline in comparable sales for the period. These results marked another challenging quarter for the company, as it had already reduced its outlook in the previous quarter.
Interim CEO Meghan Frank attributed some of the performance weakness to negative social media commentary that impacted customer perception during the quarter. The company also noted experiencing a larger-than-expected slowdown in several key product categories, particularly leggings. While the retailer indicated observing positive customer response to certain product activations and newer styles, overall reception to product launches remained uneven, and the brand continued to face headwinds in its two largest markets.
Looking ahead, Lululemon adjusted its financial projections downward. For the third fiscal quarter, the company projected revenue between $2.29 billion and $2.32 billion, representing a decline of approximately 10% to 11% year-over-year, with anticipated earnings per share ranging from 93 cents to 98 cents. For the full fiscal year, Lululemon guided for net revenue between $10.35 billion and $10.5 billion, a reduction of 5% to 7% from prior year levels and substantially below its previous guidance of $11 billion to $11.15 billion. Full-year earnings per share were projected at $9.48 to $9.73, down from earlier guidance of $10.95 to $11.15 per share.
In the second quarter, the company reported 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, though gross margin expanded 5.6%, supported in part by a $134.5 million tariff refund. Management indicated plans to focus on introducing new product styles and optimizing inventory levels to return to growth.
Lululemon’s challenges persist amid broader scrutiny from founder Chip Wilson and leadership transitions. New CEO Heidi O’Neill was set to assume her position later that week.
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