Business 4 min read By Alice Ashford
Lululemon stock slides 18% after second profit forecast cut
Lululemon shares plunged more than 18% after the athleisure retailer lowered its full-year revenue and profit forecasts for the second time, following weaker-than-expected second-quarter results.
Shares in Lululemon fell more than 18% in trading after the athleisure retailer cut its full-year revenue and profit forecasts for the second time this year, following second-quarter results that disappointed investors. The Vancouver-based company, known for its yoga pants and premium sportswear, now expects a weaker performance across the remainder of the fiscal year as demand softens in key markets.
The downgrade marks a notable reversal for a brand that was among the standout performers in the retail sector during the pandemic-era boom in comfortable clothing. Lululemon had previously trimmed its outlook earlier in the year, and Thursday's announcement confirms that the pressure on the business has not eased. Management pointed to a more cautious consumer environment and increased competition in the athleisure space as factors weighing on sales.
The company's revised guidance implies that the second half of the year will be more challenging than originally anticipated. Investors reacted sharply, wiping out a substantial portion of the company's market value in a single session. The stock decline also dragged on the broader retail sector, as traders reassessed the health of discretionary spending among higher-income consumers, a demographic that has remained relatively resilient until recently.
Lululemon's struggles stand in contrast to its performance in recent years, when it consistently delivered double-digit revenue growth and expanded its store footprint across North America, Europe, and Asia. The company has been investing heavily in new product categories, including footwear and men's apparel, as well as in its membership programme and digital channels. However, these initiatives have not yet offset the slowdown in its core women's apparel business.
Analysts noted that the second forecast cut raises questions about the company's ability to navigate a shifting retail landscape. Rivals such as Alo Yoga and Vuori have gained traction with younger shoppers, while established players like Nike and Adidas continue to compete for market share in the broader sportswear segment. Lululemon has also faced criticism over the fit and quality of some recent product lines, which may have contributed to softer repeat purchases.
The company's international expansion, particularly in China, had been seen as a key growth driver. Yet economic uncertainty in the region and changing consumer preferences have added another layer of complexity to Lululemon's outlook. Management did not provide a detailed breakdown of regional performance in the announcement, but the overall tone suggested that no major market is immune to the current headwinds.
Looking ahead, investors will be watching for signs that Lululemon can stabilise its core business while new categories gain momentum. The company remains profitable and retains a strong balance sheet, but the repeated downgrades have eroded confidence in its near-term trajectory. The next earnings report will be closely scrutinised for evidence that the measures taken to revive growth are beginning to take effect.
For now, the market's message is clear: Lululemon's period of rapid expansion has hit a rough patch, and the path back to sustained growth may take longer than previously expected.
