On September 4, Lululemon Athletica fell 19.48% in regular trading, trading at $100.58/share, with turnover of $559 million.
The selloff was triggered by the company's fiscal Q2 results and a dramatic downward revision to full-year guidance. Q2 revenue fell 4% year-over-year to $2.42 billion, missing the consensus estimate of $2.46 billion, while comparable sales declined 9%. Although EPS of $2.92 beat estimates of $1.80, the company slashed its full-year revenue outlook from $11.0-$11.15 billion to $10.35-$10.50 billion, and cut full-year EPS guidance from $10.95-$11.15 to $9.48-$9.73, both well below analyst expectations.
Management warned that Q3 North American sales are expected to decline approximately 15%, with core categories including yoga pants slowing more than anticipated. The company also plans to increase seasonal clearance activity. Multiple investment banks cut price targets, with Piper Sandler lowering its target from $110 to $80. Analysts noted that persistent North American weakness, an unexpected reversal in China market growth, and a leadership vacuum ahead of the new CEO's arrival have unsettled even long-term value investors.
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