Lululemon shares plunge 18% as retailer slashes outlook ahead of CEO handoff
Lululemon’s turnaround is getting a lot more painful.Shares of the pricey yoga pants-maker plunged nearly 18% on Friday to an eight-year low after weak Americas sales forced it to slash its full-year outlook.The disappointing figures came as incoming CEO Heidi O’Neill was set to take the reins of the company next Tuesday.The stock was trading around $100.50 on Friday afternoon after hitting a low of $97.99, wiping billions of dollars from the company’s market value.The selloff followed a dismal second quarter in which revenue fell 4% to $2.42 billion and comparable sales sank 9% worldwide.The damage was worse in the Americas, where revenue dropped 8% and comparable sales tumbled 12% as the athletic-apparel giant struggles to win back shoppers after a string of product missteps.Lululemon now expects fiscal 2026 revenue between $10.35 billion and $10.50 billion, down 5% to 7% from last year.Just three months ago, the company forecast revenue of $11 billion to $11.15 billion.The Vancouver-based biz also slashed its full-year earnings forecast to $9.48 to $9.73 a share from $10.95 to $11.15 previously.And the pain isn’t expected to let up soon.Third-quarter guidance calls for revenue to plunge between 10% and 11%.The ugly numbers mean O’Neill’s work is cut out for her as Lululemon grapples with product missteps, weaker store productivity and intensifying competition.
The ex-Nike exec will replace Calvin McDonald, who exited the company under heavy pressure at the end of January.Lululemon’s comparable sales in North America fell 3% in the second quarter of fiscal 2024, when Lululemon pulled its $98 Breezethrough leggings following complaints about their fit and design.By the second quarter of fiscal 2025, Americas comps were down 4%.They have now deteriorated to a 12% decline.Another product headache surfaced in January, when Lululemon paused online sales of its new line after customer complaints, including concerns that the fabric was too sheer.The mis...