Lululemon stock plunges following weak earnings and lowered outlook

Lululemon Athletica Inc. shares fell sharply following the announcement of disappointing second fiscal quarter results and a lowered annual outlook. The apparel retailer reported a 4% decline in revenue and a 9% decrease in comparable sales.

Interim CEO Meghan Frank attributed the performance weakness to adverse social media commentary and a greater-than-expected slowdown in core product categories, specifically leggings. While the company saw positive reception to some new designs, overall response to product launches has been uneven in its two largest markets.

The company significantly reduced its full-year net revenue guidance to a range of $10.35 billion to $10.5 billion, down from the previous estimate of $11 billion to $11.15 billion. Earnings per share guidance was also lowered to between $9.48 and $9.73, compared to the prior guidance of $10.95 to $11.15.

Second quarter net income totaled $329.2 million, or $2.92 per share, down from $370.9 million, or $3.10 per share, in the prior year. Although gross margin expanded due to a $134.5 million tariff refund, the underlying operational results showed significant pressure.