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. Lululemon now expects fiscal 2026 revenue to fall 5% to 7%, a sharp reversal for a company that once targeted $12.5 billion in sales this year. 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. Incoming CEO Heidi O’Neill is set to take the reins at Lululemon on Sept. 8 as the athletic-apparel giant grapples with falling sales and product missteps. 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 misses have been especially damaging because women’s apparel accounted for 63% of Lululemon’s fiscal 2025 revenue. Leggings sales dropped roughly 20% in the latest quarter as shoppers gravitated toward looser-fitting styles. Lululemon shares plunged nearly 18% Friday after the company reported falling sales and sharply cut its full-year outlook. Rivals Alo Yoga and Vuori have been grabbing market share at Lululemon's expense. Lululemon’s share of the athleisure market fell 10 percentage points to 43.9% in August, while Alo gained 5.9 points and Vuori picked up 2.2 points, M Science data showed. Lululemon also appears to have built its operation for growth that never arrived. The company ended fiscal 2025 with 811 stores, up from 767 a year earlier, while square footage expanded 11%. But revenue from company-operated stores increased just 1%, and sales per square foot sank 9.4% to $1,426 from $1,574.