Investors reacted sharply on Thursday as shares of Lululemon plummeted 15 percent following a dismal quarterly report and a significant downward revision of the company’s yearly outlook. The athletic wear giant saw revenue dip by 4 percent during its second fiscal quarter, with comparable sales sliding by 9 percent. This downturn marks a continuing struggle for the retailer, which had already lowered its expectations in the previous quarter as it grapples with shifting consumer tastes and market volatility.
Interim CEO Meghan Frank attributed some of the poor performance to negative sentiment swirling across social media platforms, noting that the brand faced unexpected headwinds in several of its most critical categories. Most notably, demand for Lululemon’s signature leggings slowed more than anticipated. While Frank mentioned that certain new styles have received positive feedback, she admitted that overall responses to recent product launches have remained inconsistent across their two largest markets.
Looking ahead, the financial forecast appears bleak. Lululemon expects third-quarter revenue to fall between 2.29 billion and 2.32 billion dollars, representing a double digit decline from last year. Full year projections were also slashed significantly, with net revenue now estimated between 10.35 billion and 10.5 billion dollars, well below previous estimates of up to 11.15 billion dollars. Even these adjusted figures include a helpful cushion provided by tariff refunds totaling over 134 million dollars.
As part of a strategy to reverse this trend, management plans to tighten inventory levels and introduce fresh designs intended to recapture customer interest. However, the road back seems steep as the company fights to remain relevant amid public criticism from founder Chip Wilson and broader industry competition. All eyes are now turning toward incoming CEO Heidi O’Neill, who takes control of the company next week with the daunting task of stabilizing the business and restoring growth.