TLDR
- LULU stock dropped as much as 20% in premarket Friday after Q2 earnings missed Wall Street expectations
- Q2 revenue came in at $2.4 billion, below the $2.458 billion analysts expected, down 4% year over year
- Same-store sales fell 9%, nearly double the 4.6% decline analysts had forecast
- Lululemon cut its full-year revenue outlook to $10.35B-$10.5B, a 5%-7% decline from last year
- Incoming CEO Heidi O’Neill takes over next week, inheriting a brand losing ground to rivals like Alo and Vuori
Lululemon stock fell sharply on Friday after the company reported a weak second quarter and slashed its full-year outlook for the second time this fiscal year.
Lululemon Athletica Inc., LULU
The stock dropped to around $100.89 in early trading, down roughly 17%, after falling as much as 20% in premarket hours. That puts it on pace for one of its worst single-day moves since March 2020.
Q2 revenue came in at $2.4 billion, missing Wall Street’s estimate of $2.458 billion and down from $2.525 billion a year ago. Same-store sales dropped 9% during the quarter, nearly double the 4.6% decline analysts had projected.
If you’re a Lululemon investor, or considering buying today after it’s being down 20% this morning. You have to read this first.
Not because it’s cheap it’s a buy… as 2Q Revenue Miss offset by Int’l Slip LULU posted 2Q adj. EPS of $2.92, or $2.06 past the $0.86 tariff clawback,… https://t.co/XMPPk210wf pic.twitter.com/In0VHZO6YV
— Nicholas Mugalli (@RealNickMugalli) September 4, 2026
Adjusted earnings of $2.92 per share beat the $1.79 estimate, but that figure included 86 cents per share from federal tariff refunds. Jefferies analyst Randal Konik said that makes underlying earnings power “materially worse than the headline.”
Guidance Slashed Again
Lululemon cut its full-year revenue outlook to a range of $10.35 billion to $10.5 billion, representing a 5% to 7% decline from last year. That’s a steep drop from earlier guidance of $11 billion to $11.15 billion.
Full-year adjusted earnings per share are now expected between $9.48 and $9.73, well below prior guidance of $10.95 to $11.15. Both metrics came in below what analysts were expecting.
Konik called the quarter a “triple whammy,” pointing to falling sales in U.S. stores, women’s apparel including a 20% drop in leggings, and China on a constant-currency basis.
Citi analyst Paul Lejuez said there “weren’t really any significant positives” in the quarter, with the company facing both traffic and conversion issues across regions.
New CEO Inherits a Tough Situation
Nike veteran Heidi O’Neill is set to take over as CEO next week, stepping into a brand that has lost ground to competitors like Alo and Vuori while dealing with product quality complaints.
Konik said O’Neill has “a mountain to climb,” with brand momentum “fading fast and share losses mounting.” He attributes the profit squeeze partly to decisions made by former CEO Calvin McDonald, who expanded into bigger, more expensive stores that raised fixed costs.
Morningstar analyst David Swartz told Yahoo Finance the guidance cut makes strategic sense. “There’s no reason to put out numbers that are going to be too aggressive and hard to hit,” he said. He also noted the company carries no debt, pointing out the core issue is sales growth, not financial distress.
The guidance cut does give O’Neill a lower bar to clear. But Lejuez cautioned that “another cut is also possible once she starts.”
LULU stock has now fallen more than 40% this year. The stock also dropped in April when O’Neill was first announced as the incoming CEO.
In May, Lululemon reached a settlement with founder Chip Wilson to resolve a proxy battle over board leadership, one point of contention being O’Neill’s selection.
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