Lululemon’s (LULU) incoming CEO Heidi O’Neill has her work cut out for her after the company slashed its full-year revenue outlook and reported weaker-than-expected second quarter earnings guidance.
For the second quarter of 2026, Lululemon expects net revenue to be in the range of $2.45 billion to $2.48 billion, while Wall Street was looking for $2.6 billion. Adjusted earnings are expected to be in the range of $1.76 to $1.81, lower than the Street’s forecast of $2.69.
“More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year,” interim co-CEO and CFO Meghan Frank told investors in the earnings release. Frank added that the company is taking “additional actions to reposition where needed and further strengthen our product engine.”
For the full year, the company cut its revenue outlook to $11 billion to $11.15 billion, down from the previously expected range of $11.35 billion to $11.5 billion. The guidance for adjusted earnings also came in lower and is now seen in the range of $10.95 to $11.15, compared with previous expectations of $12.10 to $12.30.
Lululemon stock tumbled more than 11% in after-hours trading on Thursday.
In the first quarter, Lululemon’s key metrics came mostly in line with Wall Street’s expectations.
Revenue grew 4% to $2.47 billion, just above the $2.44 billion the Street forecast, while adjusted earnings per share came in line with estimates at $1.69. Same-store sales grew 1%, slightly above the expected 0.1% decline.
Heidi O’Neill, a former Nike veteran, is set to start as CEO on Sept. 8. She faces a tall order as competition increases and sales slow.
Lululemon “is in a transition period right now with a new CEO coming in in September … and it does appear to be affecting sales,” Morningstar’s David Swartz told Yahoo Finance, adding that “there are reasons for optimism right now.”
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