Key facts
- Lululemon shares fell nearly 13% in premarket trading.
- The company lowered its annual profit forecast.
- Brand backlash and underwhelming product launches contributed to the forecast reduction.
- The company expects a drop in second-quarter sales.
- The stock's valuation multiple has compressed significantly.
Lululemon Athletica shares fell nearly 13% in premarket trading on Friday after the company reduced its annual profit forecast. This guidance cut was attributed to brand backlash and disappointing product launches, raising concerns about the pace of recovery for the athleisure brand. The company also anticipates a drop in second-quarter sales for the first time since the pandemic. Lululemon is currently navigating a proxy fight with its founder, Chip Wilson, and faces increased competition from newer brands. Investors are closely watching incoming CEO Heidi O'Neill to see if she can revive product innovation and momentum in the U.S. market. The company's valuation multiple has compressed significantly, trading at around 10 times forward earnings, compared to Nike's 22.85 and Adidas's 15.10. The stock is on track to lose over $1.8 billion in market value on Friday, adding to a nearly two-thirds loss over the past 12 months.