Lululemon Stock Sinks as Revenue Decreases and Guidance Cut

Lululemon Athletica (NASDAQ: LULU) stock plunged as much as 18-20% in after-hours trading Thursday, after the athleisure retailer reported disappointing fiscal second-quarter results and slashed its full-year outlook, deepening investor concerns about its turnaround prospects.

The company posted revenue of $2.42 billion, below the $2.46 billion analysts expected, as comparable sales fell 9%. Earnings of $2.92 per share beat consensus estimates, boosted by a $134.5 million tariff refund that lifted gross margin to 60.5%.

Leggings sales, long core to Lululemon’s identity, dropped roughly 20%, while Americas revenue declined 8% and China sales—usually a bright spot—fell 2% after a marketing misstep involving a Great Wall campaign drew backlash on social media.

Lululemon now projects fiscal 2026 revenue to decline 5-7%, down sharply from its prior guidance of flat-to-down 1%, with earnings per share cut to $9.48-$9.73 from $10.95-$11.15. Third-quarter revenue guidance of $2.29-$2.32 billion implies a 10-11% year-over-year decline.

Interim Co-CEO and CFO Meghan Frank cited “negative commentary” on social media and inconsistent product response, acknowledging “significant work ahead.” Attention now shifts to incoming CEO Heidi O’Neill, a Nike veteran who takes the helm next week following a proxy battle with founder Chip Wilson.

Lululemon’s athleisure market share has shrunk 10 percentage points to 43.9%, ceding ground to rivals Alo Yoga and Vuori. The stock has fallen nearly 69% since early 2025, with investors warily awaiting O’Neill’s turnaround plan.