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Lululemon Athletica Shares Plunge as Retailer Cuts Outlook Amid Tough Market Dynamics

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Lululemon Athletica Shares Plunge as Retailer Cuts Outlook Amid Tough Market Dynamics

Lululemon Athletica (LULU) shares tumbled in premarket trading on Friday after the athletic apparel retailer lowered its full-year outlook amid challenging market dynamics and continued pressure on the brand.

The company now anticipates per-share earnings in the range of $9.48 to $9.73 for fiscal 2026, it said late Thursday, down from prior projections of $10.95 to $11.15. Revenue is expected in the range of $10.35 billion to $10.5 billion, compared with the previous guidance of $11 billion to $11.15 billion.

The current FactSet consensus is for EPS of $10.11 and sales of $10.57 billion for the ongoing fiscal year. Lululemon's stock plunged 20% in most recent premarket activity, and had lost 41% this year through Thursday close.

The overall response to Lululemon's product launches remained "inconsistent" heading into the third quarter, interim co-Chief Executive Meghan Frank said during an earnings call, according to a FactSet transcript.

"We've continued to see pressure on the brand in both of our largest markets," Frank said, pointing to North America and China. "Based on our assessment of these current trends, we've updated our guidance for the remainder of the year."

Lululemon appointed industry veteran Heidi O'Neill as its new chief executive in April. She is set to take the helm next week.

Last month, UBS Securities said it expected weak sales growth for Lululemon in China and the US. The growing demand risk in China is driven by self-inflicted public relations blunders, including a social media backlash over its Great Wall event and concerns around polyfluoroalkyl substances in products, the brokerage said at the time.

"We faced negative commentary in the media and social channels, which impacted traffic and softer-than-planned response to some new product launches, which contributed to a moderating sales trend," Frank told analysts.

For the current quarter, Lululemon expects EPS between $0.93 and $0.98. Revenue is set to be in a range of $2.29 billion to $2.32 billion, representing an annual decline of 10% to 11%. The Street is looking for EPS of $1.21 and sales of $2.34 billion.

The second-half guidance assumes a slower trend in North America relative to the second quarter, while international performance is expected to remain broadly consistent with second-quarter trends, Frank said.

Comparable sales in the quarter ended Aug. 2 fell 9%, versus the market's forecast that called for a 4.6% decrease. The metric slid 12% in the Americas, and 2% in China. Revenue fell 4% year on year to $2.42 billion, below the Street's view of $2.46 billion.

Lululemon's earnings slipped to $2.92 per share in the second quarter from $3.10 the year before, but came in ahead of the average analyst estimate of $1.79.

In August, sportswear maker Under Armour (UAA, UA) lowered its full-year revenue outlook amid weak demand in North America and Asia Pacific.

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