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FinanceLululemon stock plunges 15% on disappointing earnings and slashed full-year outlook
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Lululemon Athletica's stock fell 15% on Thursday after the company reported disappointing second-quarter fiscal 2026 results and slashed its full-year outlook. The retailer posted a 4% decline in revenue to $2.42 billion, missing analyst expectations of $2.46 billion, and a 9% drop in comparable sales. Net income fell to $329.2 million, or $2.92 per share, from $370.9 million, or $3.10 per share, a year earlier. For the third quarter, Lululemon expects revenue of $2.29 billion to $2.32 billion, a decline of roughly 10-11% year-over-year. The full-year revenue forecast was cut to $10.35-$10.5 billion, representing a 5-7% decline, down from prior guidance of $11-$11.15 billion. The company's gross margin improved 5.6% partly due to a $134.5 million tariff refund. Lululemon continues to struggle with customer relevancy amid criticism from founder Chip Wilson. New CEO Heidi O'Neill, a former Nike executive, is set to take over next week.
Source report
Shoppers walk past a Lululemon store at a shopping mall on June 21, 2026, in Hong Kong, China. Cheng Xin | Getty Images
Shares of Lululemon plunged 15% on Thursday after the retailer reported another quarter of disappointing results and cut its full-year outlook.
Key Quarterly Results
The company reported a 4% decline in revenue and a comparable sales decrease of 9% for the second fiscal quarter. This marks the latest rough quarter for the apparel retailer, which had already reduced its guidance in the previous quarter.
Second fiscal quarter performance vs. Wall Street expectations (LSEG analyst survey):
- Earnings per share: $2.92 (comparability to the $1.79 expected was not immediately clear)
- Revenue: $2.42 billion vs. $2.46 billion expected
For the quarter, Lululemon reported net income of $329.2 million, or $2.92 per share, compared to $370.9 million, or $3.10 per share, in the same period last year.
Gross profit decreased 1% to $1.5 billion, while gross margin grew 5.6%, boosted by a tariff refund of $134.5 million.
Outlook
Third fiscal quarter:
- Revenue expected between $2.29 billion and $2.32 billion, a decline of roughly 10% to 11% from the prior year
- Earnings anticipated at 93 cents to 98 cents per share
Full fiscal year:
- Net revenue expected between $10.35 billion and $10.5 billion, representing a 5% to 7% decline
- Down from previous guidance of $11 billion to $11.15 billion
- Earnings anticipated between $9.48 and $9.73 per share, compared to previous guidance of $10.95 to $11.15 per share
- The new outlook includes a boost from tariff refunds
Leadership Change
Lululemon has been struggling to regain strength and relevancy among its customers, even as it faces criticism from founder Chip Wilson. The company's new CEO, Heidi O'Neill, is set to officially take the reins of the retailer next week.
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Lululemon stock plunges 15% on disappointing earnings and slashed full-year outlook