Lululemon Sinks 17% as China, North America Sales Miss — SkimNews
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- Lululemon shares fell 17% in early Friday trading after Q2 revenue of $2.4B missed the $2.46B estimate, with comparable sales down 9% year-over-year
- Lululemon cut full-year fiscal 2026 guidance to $10.35B–$10.5B in revenue (vs $11.04B estimate) and $9.48–$9.73 EPS (vs $10.88 estimate), with Q3 guidance of $2.29B–$2.32B revenue also well below Street expectations
- China Mainland comparable sales fell 8%, well short of guidance, hurt by weak traffic tied to social media backlash over a Great Wall marketing event and a soft Tmall 618 promotion
- North America comparable sales dropped 12%, with leggings specifically down 20% as shoppers shift toward away-from-body silhouettes
- Bank of America maintained its Neutral rating, cut EPS estimates, and lowered its price objective to $122 from $140, saying the reset leaves no clear line of sight to an inflection point
- Heidi O'Neill, Lululemon's incoming CEO who starts next week, could signal a strategy shift on the next earnings call per BofA
- Gross margin rose 200 basis points to 60.5%, boosted by $134.5M in tariff refunds during the quarter, with another $105M in refunds not yet reflected in guidance
Why it matters: The guidance reset removes roughly $540M–$690M from full-year revenue versus consensus and gives investors no near-term catalyst. BofA expects Q3 trends to worsen with approximately 1,050 basis points of margin compression from continued store openings and marketing spend, meaning the incoming CEO inherits a deteriorating core business before she can articulate any strategy reset.
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