Business & Finance
Lululemon shares drop 15% following revenue decline and reduced full-year forecast
The athletic apparel maker reported a 4% decrease in second-quarter sales and lowered its annual outlook ahead of incoming CEO Heidi O'Neill's arrival.
The short version
- Lululemon stock dropped 15% after missing revenue estimates and reducing full-year financial projections.
- Second-quarter net revenue fell 4% to $2.42 billion, while comparable sales dropped 9% amid slowing demand for core items like leggings.
- Incoming CEO Heidi O'Neill takes over next week as the company attempts to reverse sluggish sales with new styles and tighter inventory.
Key facts
- Lululemon's second-quarter revenue declined 4% year-over-year to $2.42 billion, below analyst expectations of $2.46 billion.[CNBC]
- The company reported second-quarter net income of $329.2 million, or $2.92 per share, compared to $370.9 million, or $3.10 per share, in the same period the previous year.[CNBC]
- Comparable sales dropped 9% during the second fiscal quarter.[CNBC]
- Lululemon lowered its full-year net revenue forecast to between $10.35 billion and $10.5 billion, down from its prior range of $11 billion to $11.15 billion.[CNBC]
- Interim CEO Meghan Frank attributed performance hurdles to adverse social media reaction and reduced demand in core categories such as leggings.[CNBC]
- Heidi O'Neill is scheduled to take over as the company's chief executive officer next week.[CNBC]
What remains uncertain
- It remains uncertain whether new product launches, inventory adjustments, and the transition to incoming CEO Heidi O'Neill will successfully reverse sales declines in the company's largest markets.[CNBC]