Lululemon lowered its outlook again, signaling that momentum has cooled just as incoming CEO Heidi O'Neill arrives. Comparable sales, defined as stores open at least a year, dropped 9% in the latest quarter, the first slide since the pandemic period when the company paused reporting that metric. That shortfall came in below the average of analyst estimates compiled by Bloomberg. "While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook," said interim co-CEO Meghan Frank.
Management now expects full-year sales between $10.35 billion and $10.5 billion for the fiscal year ending in early 2027, a step down from June's outlook, which had already been cut. The quarter was weakest in the Americas, where revenue fell 8%. Women's apparel was down 4%, whereas international revenue advanced 4%.
Investors reacted fast: the stock was off roughly 15% at 4:09 p.m. in extended New York trading. Shares are down more than 40% year to date, and as of Thursday's close the market value sat at less than one quarter of its late-2023 peak.
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O'Neill, a veteran of Nike, is set to take over next week, a little more than four months after she was named to the role. Her near-term priorities: craft a strategy to claw back market share from Alo and Vuori, recover from recent product missteps and a heavy reliance on markdowns, and rebuild an executive bench thinned by departures. She will also need alignment with founder Chip Wilson, who frequently criticized strategy before a May cooperation agreement. The agreement requires ongoing meetings with O'Neill and prevents him from making negative public statements concerning the company for roughly 18 months.
For shoppers and investors alike, this is a story about whether a beloved brand can find its footing again. If O'Neill can stabilize demand in the Americas, fix product misses, and taper discounting, the earnings picture could look less wobbly. Until then, the numbers say growth is leaning on international strength while the core market is cooling, and the stock is trading like the turnaround will take time.
