What happened: Lululemon (LULU) stock dropped 18% on Friday.
What’s behind the move: The athleisure wear company cut its revenue and profit forecast a day earlier. Lululemon said its second quarter fiscal 2026 revenue decreased 4% to $2.4 billion, with comparable sales decreasing 9%.
“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” said Meghan Frank, Interim co-CEO and CFO.
For 2026, the company now expects net revenue to be in the range of $10.35 billion to $10.5 billion, representing a decline of 5% to 7%. Adjusted earnings per share are now expected to be in the range of $9.48 to $9.73 for the year.
The disappointing results come as Nike veteran Heidi O’Neill prepares to take over as CEO next week.
“It makes sense that Lululemon would want to set expectations low at this point because there is a lot of uncertainty, and there’s no reason to put out numbers that are going to be too aggressive and hard to hit,” David Swartz, Morningstar senior equity analyst, told Yahoo Finance on Thursday after the earnings release.
“This company has no debt. So there are no real financial problems to worry about. The problem is with the sales growth,” he added, noting the incoming CEO’s experience at Nike should be positive for the company.
What else you need to know: Lululemon has had a rocky year with the stock down more than 40%. Shares sank in April after the company announced O’Neill as its next CEO.
In May, the company and its founder, Chip Wilson, reached an agreement to settle a long-running dispute over the board’s leadership. One of the points of contention in the proxy battle between Wilson and Lululemon’s board was the selection of O’Neill.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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