Lululemon shares fell as much as 20% on Sept. 3 after the athletic-apparel retailer cut its full-year sales outlook for the second time this fiscal year, even as second-quarter profit topped Wall Street's estimates.
The numbers
- Net revenue: $2.4 billion, down 4% year over year (down 5% in constant dollars)
- Comparable sales: down 9% overall, down 10% in constant dollars
- Americas comparable sales: down 12%
- International comparable sales: down 3% (down 6% in constant dollars)
- Diluted EPS: $2.92, which included $0.86 per share from tariff refunds
- Gross margin: 60.5%, up 200 basis points from a year earlier
A weaker outlook
Lululemon now expects full-year fiscal 2026 net revenue of $10.35 billion to $10.50 billion, a decline of 5% to 7% from the prior year, with diluted earnings per share of $9.48 to $9.73. The company is currently being run by interim co-CEOs following a leadership transition.
While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook.
Interim co-CEO Andre Maestrini said the company remains confident in its ability to "take the right steps to strengthen our performance and deliver sustainable growth over time," even as it works through weaker demand in its largest market.
What it means for shoppers
A steep pullback in North American demand hasn't yet translated into deep discounting from lululemon, but the guidance cut signals the company expects the slowdown to continue through the rest of the year.
