Lululemon Cuts the Year Again. The New CEO Inherits a Brand Problem.
Lululemon just handed its next CEO a cold open on day one.
Shares of Lululemon Athletica (LULU) tumbled about 15% to 18% after hours and into Friday premarket after the athleisure brand cut full-year guidance for a second straight quarter. Second-quarter revenue fell about 4% to roughly $2.4 billion. Comparable sales dropped 9%, the first decline of that kind since the pandemic reporting pause.
Americas revenue, the company's biggest book, fell about 8% after a tiny gain a year earlier. China revenue slipped about 2% in constant dollars after a big prior-year jump. Full-year sales are now guided to about $10.35 billion to $10.5 billion, a decline of roughly 5% to 7%. Adjusted EPS is now called at about $9.48 to $9.73, well below the prior range near $11.
The job waiting for Heidi O'Neill
Former Nike executive Heidi O'Neill takes the CEO seat on September 8. She inherits a brand that spent years owning stretchy pants culture and then lost the product plot to competitors, promotions, and tired assortments. Interim leadership already said the work ahead is significant. At least a dozen brokerages cut targets after the report, with one Street-low target near $80.
The balance sheet is not the crisis. Lululemon carries little debt. The crisis is relevance. Shoppers still know the name. Too many of them are not opening their wallets the way they used to at full price.
What I am watching
Turnarounds in apparel live or die on product, not press releases. If O'Neill can rebuild the lineup people want to wear without living on permanent markdown, the multiple can heal. If Americas comps keep sliding into holiday, the cheap-looking multiple stays cheap for a reason.
I have watched plenty of beloved consumer brands talk their way through a soft patch. The ones that come back usually fix the rack first.
Bottom line: Lululemon cut the year again right before a CEO handoff, and the real test is whether the next leader can make people want the clothes again, not whether the stock already looks beaten up.
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