Key facts
- Lululemon lowered its full-year revenue forecast to $11 billion-$11.15 billion, below estimates.
- Second-quarter sales and profit forecasts also missed expectations.
- First-quarter net revenue increased 4.3% year-over-year to $2.47 billion.
- First-quarter EPS was $1.69, meeting estimates.
- The company cited headwinds and brand challenges for the revised outlook.
- Lululemon settled a proxy fight with founder Chip Wilson, who has been critical of the company.
Lululemon's shares experienced a significant decline in premarket trading, extending its multi-year bear market and approaching levels not seen since 2018, following a reduced full-year guidance. The athleticwear company now anticipates net revenue between $11 billion and $11.15 billion, falling short of the $11.49 billion consensus estimate. Its second-quarter sales and profit forecasts also missed expectations, with net revenue projected at $2.45 billion to $2.48 billion against an estimate of $2.6 billion, and EPS forecast between $1.76 and $1.81, below the $2.69 estimate. First-quarter results showed modest top-line growth of 4.3% year-over-year to $2.47 billion, with EPS at $1.69, meeting estimates. However, comparable sales in constant currency were down 2%, with a notable 6% decrease in the Americas, while international sales grew 8%. The company cited ongoing headwinds and brand challenges for the revised outlook, with Interim Co-CEO and CFO Meghan Frank noting "headwinds that have led us to adjust our outlook for the full year." The dismal forecast places additional pressure on incoming CEO Heidi O'Neill to revitalize the brand amid market-share losses and product issues. Analysts from Bloomberg Intelligence, Barclays, and Piper Sandler expressed concerns over the guidance and underlying demand, with some noting negative impacts from "bad press and product issues." Lululemon recently settled a proxy fight with founder Chip Wilson, who has been vocal about his criticisms of the company's direction.