Lululemon Stock Drops 15% After Q2 Revenue Falls 4% and Full-Year Outlook Cut

Lululemon shares plunged roughly 15% on Thursday after the athleisure retailer reported a sharp decline in second-quarter profit and revenue and slashed its full-year guidance, signaling a deepening struggle to revive its North American business. Revenue for the fiscal second quarter fell 4% to $2.4 billion, with comparable sales down 9%. Diluted earnings per share dropped to $1.69 from $2.60 a year earlier, though that result edged past the analyst consensus of $1.68. Gross margin contracted 410 basis points to 54.2%, and operating income fell 37% to $276.9 million.

For the full year, Lululemon cut its net revenue outlook to a range of $10.35 billion to $10.5 billion, representing a decline of 5% to 7%, a significant step down from a prior forecast of $11.35 billion. Adjusted earnings per share guidance was lowered to $9.48 to $9.73, well below earlier expectations. Interim Co-CEOs Meghan Frank and Andre Maestrini, who also serves as CFO, cited "challenging dynamics" while pointing to some positive signals in North America, including stronger full-price sales and demand in training, tennis, and running categories.

The results land as incoming CEO Heidi O'Neill is set to officially take over leadership next week, inheriting a brand contending with soft North American demand, higher markdowns, and tariff-related cost pressures. Lululemon ended the quarter with $1.5 billion in cash and repurchased $358 million worth of shares during the period, though neither provided support for the stock in after-hours trading.