Lululemon's stock plunged 15% on Thursday after the retailer posted a 9% drop in comparable sales and cut its full-year revenue and earnings guidance. The reset lands just days before incoming CEO Heidi O'Neill officially takes over. Shares fell further after the close as analysts weighed the results against the leadership change.
Shares of Lululemon plunged 15% on Thursday after the athletic-apparel retailer reported another disappointing quarter and cut its outlook for the year. The company posted a 4% decline in revenue and a 9% drop in comparable sales for the second fiscal quarter.
The stock fell further after the close, tumbling 16.2% in after-hours trading, as investors weighed the results just days ahead of a leadership change.
Guidance cut deepens for the year ahead
For the third fiscal quarter, Lululemon said it expects revenue between $2.29 billion and $2.32 billion, a decline of roughly 10% to 11% from the prior year, with earnings of 93 cents to 98 cents per share. For the full year, it cut its net revenue forecast to between $10.35 billion and $10.5 billion. According to Investing.com, that guidance is a reversal from prior guidance of flat to down 1%.
The company also lowered its earnings outlook to $9.48 to $9.73 per share, down from a prior range of $10.95 to $11.15, though the new outlook includes a boost from tariff refunds.
Analysts had already turned cautious
Ahead of the report, Goldman Sachs had trimmed its price target on the stock to $111, while Jefferies and Evercore ISI maintained Hold-equivalent ratings at $115. After the results, the stock slid toward its 52-week low of $104.44. That extended a year-to-date decline that had already exceeded 40% before Thursday's session.
Management points to social media pressure
Interim CEO Meghan Frank said on a call with analysts that the company saw a greater-than-expected slowdown in some of its core categories, including leggings. According to CNBC, Frank said: "We know there is much more work to be done", as management focuses on introducing new styles and tightening inventory to return to sales growth.
The reset arrives just before incoming CEO Heidi O'Neill assumes the role on September 8.
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