Lululemon shares fell by as much as 19 percent on Thursday in after-hours trading on second quarter earnings news that sales dropped 9 percent over the same point last year, while the company slashed its yearly outlook again.
The athleisure wear maker said it posted $2.4 billion in revenue in the quarter, below its own guidance of $2.45 billion to $2.475 billion just days before new CEO Heidi O’Neill prepares to take on the task of steering the struggling brand through an ongoing turnaround effort.
“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” Interim Co-CEO and chief financial officer, Meghan Frank said. “Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management.”
The company reported a 4 percent dip in revenue that was heightened by an 8 percent drop in the Americas as international revenue saw a 4 percent boost.
“We remain confident in our ability to take the right steps to strengthen our performance and deliver sustainable growth over time,” Interim co-CEO, president and chief commercial officer, André Maestrini said. “I would like to thank our teams around the world for their focused efforts and continued commitment to Lululemon.”
A revised full fiscal year outlook now puts Lululemon in a position to earn between $9.48 and $9.73 per diluted share after previously projecting between $10.95 and $11.15 per share. Meanwhile, shares of the brand have slipped nearly 69 percent since early 2025.
Lululemon now believes it will pull in between $10.35 billion and $10.5 billion in revenue, or a 5 percent to 7 percent drop which is off from a forecast of $11 billion to $11.15 billion.
With a handoff to O’Neill imminent, Lululemon is banking on a refreshed product line and hoping that customer loyalty is part of change that will easily stretch into 2027.
O’Neill, a former Nike executive, was named CEO in April following Calvin McDonald’s exit in January and has a number of tasks that will require her immediate attention, like increased competition from rivals like Vuori and Alo in a segment that it helped define. Lululemon’s stock also fell by nearly half last year as pressure on McDonald mounted, and he announced in December he would step down.
The company also weathered a wave of public criticism last year from founder Chip Wilson, who openly disagreed with the direction of the brand’s strategy. Wilson launched a proxy battle in December that highlighted the brand’s fight to spark sales and stay relevant among cheaper brands and labels that have connected with younger audiences.
Meanwhile, the dispute lingered and Wilson appealed to shareholders to back his picks for the company’s board, with his voice looming heavy in what Lululemon acknowledged was “negative commentary” in media reports that ultimately impacted its public perception.
Wilson founded the brand in 1998 and holds over 8 percent of the company’s shares as its largest stakeholder. In May, he agreed to a truce with Lululemon to not criticize the company for 18 months in exchange for two of his nominees joining the company’s board.
Lululemon said it expects revenue in the third quarter to be between $2.29 billion and $2.32 billion and would represent a 10 to 11 percent decline from the same point last year.
