Key Takeaways:
Lululemon Athletica cut its fiscal 2026 revenue forecast to $10.35 billion to $10.50 billion after second-quarter sales missed estimates, its second straight annual guidance reduction.
"We are taking a prudent approach with our revised full-year outlook as we navigate challenging dynamics," Meghan Frank, interim co-CEO and chief financial officer, said.
Revenue fell 4 percent year over year to $2.42 billion in the quarter ended July, missing the $2.46 billion consensus. Earnings per share came in at $2.92. Comparable sales dropped 9 percent, dragged by an 8 percent decline in the Americas that offset a 4 percent gain internationally. Inventory eased 1 percent to $1.7 billion, and the company ended the period with 825 stores after opening nine.
The Vancouver-based retailer now expects full-year revenue to decline 5 percent to 7 percent, versus its prior forecast of flat to down 1 percent, and EPS of $9.48 to $9.73, cut from $10.95 to $11.15. Third-quarter revenue is projected at $2.29 billion to $2.32 billion, below the $2.53 billion estimate, with EPS of 93 cents to 98 cents against a $2.43 consensus.
Shares of Lululemon Athletica Inc. (NASDAQ: LULU) fell 16.40 percent in after-hours trading to $101.82, leaving the stock down nearly 69 percent since the start of 2025. The company holds about $1.4 billion in cash.
The cut lands a week before Heidi O'Neill, a Nike veteran, takes over as chief executive on Sept. 8, following a bruising proxy fight with founder Chip Wilson. Lululemon has ceded ground in North America to newer brands including Alo Yoga and Vuori as demand for premium activewear softens, a trend echoed by Dick's Sporting Goods' own quarterly miss last month. The stock trades at a forward price-to-earnings ratio of about 11, below the consumer discretionary sector median of 16 and its five-year average of 25.
The Americas contraction deepens the weakness seen in the first quarter, when revenue rose 4 percent to $2.5 billion but the region fell 4 percent and operating income dropped 37 percent. International growth of 4 percent in the latest period, including China, its fastest-growing market, has not offset the home-region slide.
The second consecutive guidance reduction shows management sees no near-term rebound in its core market. Investors will watch O'Neill's first earnings call for signs her product and marketing push can arrest the decline in Americas comparable sales.
This article is for informational purposes only and does not constitute investment advice.
