VANCOUVER, September 11 — Lululemon Athletica shares plunged roughly 20% to $100.07 on Friday, the day the athleisure retailer reported second-quarter fiscal 2026 results, closing at their lowest level in about eight years and leaving the stock down 51.85% year to date. The bottom line: the quarter itself was soft, but the guidance cut was the damage. Lululemon slashed its full-year outlook, reversing prior guidance that had projected growth.
Q2 revenue came in at $2.42 billion, down 4.3% year over year and below the $2.46 billion consensus estimate. Comparable sales fell 9% globally.
Americas comparable sales dropped 12%, and leggings sales declined approximately 20%. GAAP earnings per share were $2.92, topping consensus. That figure included an $0.86 per share benefit from a $134.5 million IEEPA tariff refund.
Excluding that one-time item, the underlying performance was weaker than the headline EPS suggested. The guidance was where the outlook broke.
Full-year FY2026 revenue guidance was cut to a range of $10.35 billion to $10.50 billion, a decline of 5% to 7%, against prior guidance calling for 2% to 4% growth. Full-year EPS guidance fell to $9.48 to $9.73 from the previous range of $12.10 to $12.30. For the third quarter, revenue is guided to contract 10% to 11%.
Q3 operating margin is guided to collapse to 6.5% from 17% a year earlier. CFO Meghan Frank said the company is “taking a prudent approach with our revised full-year outlook.”
A new CEO and a strategic review
Incoming CEO Heidi O’Neill starts next week and will conduct a strategic review, according to Barron’s. Her arrival comes as the company faces multiple pressures: declining North American traffic, tariff-related margin compression, and a consumer environment that remains cautious. Traders are expected to watch for her turnaround plan, clarity on tariffs, and holiday traffic data as potential catalysts.
Market sentiment has shifted sharply. Reddit sentiment flipped from bullish (72) to bearish (22), reflecting the abrupt change in retail investor mood.
Against a rising market
The broader market that day moved the other way. The S&P 500 closed at 7,672.20, up 0.99%. The Dow Jones finished at 52,574.20, up 1.00%.
The Nasdaq 100 closed at 29,456.30, up 1.18%, and the Russell 2000 ended at 2,909.47, up 0.70%. Lululemon’s decline stood in stark contrast to those gains.
The stock’s 20% single-day drop and eight-year low underscore the severity of the outlook revision. A durable bottom would likely require evidence that Americas traffic is stabilizing, and until then, upside moves may face resistance. With the stock at an eight-year low and a new CEO set to take over, the coming weeks will be critical for Lululemon’s turnaround efforts.
