Lululemon Plunges 20% to 8-Year Low After Second Guidance Cut and Q2 Revenue Miss

Lululemon Athletica shares collapsed as much as 20% on September 4 to an eight-year low, touching $97.42 in trading and a 52-week low of $98.02, after the company reported second-quarter revenue of $2.4 billion, down 4% year over year and below the consensus estimate of $2.46 billion. Comparable sales fell 9% in the quarter, with Americas revenue declining 8% and comparable sales in that region dropping 12%. International growth, previously a bright spot, also stalled, with China revenues slipping 2%. The company cut its full-year revenue outlook to a range of $10.35 billion to $10.50 billion, marking the second guidance reduction this fiscal year and what would be the retailer's first full-year revenue decline since going public.

The Q2 earnings-per-share figure beat expectations, but analysts noted the beat was largely artificial: $134.5 million in tariff refunds inflated the bottom line and masked underlying margin deterioration. Jefferies described the quarter as a "triple whammy," pointing to weakening traffic, uneven product acceptance, and tightening costs. KeyBanc cited China challenges and product missteps as compounding pressures, while Wells Fargo cut its price target citing worsening demand. UBS trimmed its target to $106 on margin concerns, and Bernstein, Stifel, Morgan Stanley, Needham, and Freedom Broker all reduced their targets as well, with Freedom Broker settling at $115.

The results land just days before incoming CEO Heidi O'Neill formally takes over, handing her a company grappling with softening North American retail traffic, a slowing China business, and product credibility questions. Jefferies analyst Randal Konik said the former CEO "basically ruined the company." Investor Gary Black separately highlighted a four-month strategic misstep as central to the stock's collapse.

Hedge fund manager Michael Burry emerged as a contrarian voice, publicly declaring Lululemon his largest stock position and stating he plans to "aggressively buy" shares below $100, calling the selloff a "fat pitch." The stock finished the session near the $100 level as technical analysts noted momentum approaching oversold territory. Separately, company founder Chip Wilson and his wife Shannon "Summer" Wilson, a business partner of more than 20 years and one of Lululemon's earliest employees, announced they are divorcing.