Shares of athletic apparel retailer Lululemon Athletica Inc. slid 15% on Thursday following the release of its second‑quarter results, which showed a decline in revenue and a cut to the company’s full‑year outlook.
Second‑quarter performance
The company reported a 4% drop in revenue for the quarter, with comparable sales falling 9% year over year. Net income slipped to $329.2 million, or $2.92 per share, compared with $370.9 million, or $3.10 per share, a year earlier. Revenue of $2.42 billion fell short of the $2.46 billion Wall Street expected, according to a survey by LSEG. Earnings per share came in at $2.92, though it was unclear whether that matched analysts’ expectation of $1.79.
Gross profit decreased 1% to $1.5 billion, while gross margin rose 5.6% after the company received a tariff refund of $134.5 million. The retailer cited “negative commentary” on social media and a “greater‑than‑expected” slowdown in core categories such as leggings as factors that weighed on the quarter’s performance.
Revised outlook for the year
Looking ahead, Lululemon projected third‑quarter revenue of $2.29 billion to $2.32 billion, representing a year‑over‑year decline of roughly 10% to 11%. The company expects earnings of 93 to 98 cents per share for that period.
For the full fiscal year, the retailer now forecasts net revenue between $10.35 billion and $10.5 billion, a decrease of 5% to 7% from the prior year, and down from its earlier guidance of $11 billion to $11.15 billion. Expected earnings have been trimmed to $9.48‑$9.73 per share, versus the previous range of $10.95‑$11.15 per share. The revised outlook incorporates a boost from tariff refunds.
Management response and leadership change
Interim chief executive Meghan Frank told analysts that the company is concentrating on introducing new styles and tightening inventory to restore sales growth. She noted that while some newer styles received positive guest reactions, overall response to product launches remained inconsistent, and pressure persisted in the retailer’s two largest markets.
“We know there is much more work to be done,” Frank said on the call. “Our management team leaders and employees are focused on serving our guests and executing initiatives to drive an inflection in our business.”
In addition to the financial adjustments, Lululemon announced that its new permanent CEO, Heidi O’Neill, will assume the role next week, succeeding founder Chip Wilson’s influence and the interim leadership of Frank.
The combination of weaker quarterly results, a lowered revenue outlook and a forthcoming leadership transition underscores the challenges Lululemon faces as it seeks to regain momentum in a competitive apparel market.
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
