Lululemon Athletica Inc. (NASDAQ: LULU) reported disappointing Q2 earnings for fiscal year 2026, leading to an 18% drop in share price during Friday’s pre-market trading. The stock fell below $100 for the first time since 2018 and is approximately 80% lower than its peak in 2024.
Despite an initial earnings per share (EPS) of $2.92, which surpassed analyst expectations of $1.79, 86 cents of this figure was attributed to tariff refunds, suggesting an underlying EPS of only $2.06. Revenues decreased by 8% in the Americas, with a 20% drop in sales of its flagship leggings, raising concerns about the brand’s declining popularity. Additionally, Lululemon cut its fiscal year revenue guidance to $10.35 billion-$10.50 billion, signaling continued challenges moving forward.
The company reported only 4% growth in China, which failed to counterbalance its struggles in the U.S. market. As management acknowledged a challenging outlook for Q3 with expected revenue declines of 10%-11%, the market reacted swiftly, indicating skepticism regarding Lululemon’s capacity for a turnaround.
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