Lululemon shares fell 17.38% on September 4 after investors reacted to the athleticwear company’s second cut to its full-year forecast and concerns that a turnaround could take longer under incoming Chief Executive Heidi O’Neill, Reuters reported. The selloff followed Lululemon’s September 3 reduction in its fiscal 2026 revenue and profit guidance.
Second fiscal 2026 outlook cut
Lululemon now expects fiscal 2026 revenue of $10.35 billion to $10.50 billion and diluted earnings per share of $9.48 to $9.73. Its previous forecast called for revenue of $11.00 billion to $11.15 billion and diluted EPS of $10.95 to $11.15, according to the company’s earnings release.
The revised ranges lower both the top-line and profit expectations set in the prior outlook. The company issued the update alongside quarterly results on September 3.
Americas comparable sales decline
In its September 3 release, Lululemon reported revenue of approximately $2.4 billion for the quarter ended August 2, down 4% from a year earlier. Comparable sales declined 9% overall, including a 12% decline in the Americas. The reported sales declines provide context for the company’s weaker full-year guidance.
Brokerages cite cost and margin pressure
At least 12 brokerages cut their Lululemon price targets on September 4, Reuters reported. The firms pointed to declining sales, margin pressure and a cost structure built for growth even as demand weakens.
The combination has sharpened investor attention on the scale and likely duration of the overhaul facing O’Neill. With the company’s outlook now calling for lower revenue and diluted EPS than previously projected, the market reaction reflected concern that restoring growth may require changes beyond a single weak quarter.
