Lululemon stock dropped 18% as the retailer slashed full-year guidance for the second time, citing slowing traffic and weak leggings sales despite a debt-free balance sheet.
Lululemon cut full-year guidance for the second time, with revenue and EPS projections reduced sharply, leading to an 18% stock drop.
Lululemon Athletica shares tumbled 18% after the retailer issued its second full-year guidance cut of 2026. While the company reported an EPS beat, the result was bolstered by a one-time tariff refund, masking underlying weakness in U.S. and China traffic. With revenue projections now lowered to $10.35 billion-$10.5 billion, investors are questioning if the brand's current valuation offers a recovery opportunity or signals structural decline.
The EPS beat was primarily attributed to a one-time tariff refund of $0.86 per share, which masked significant underlying weakness in revenue and comparable sales.
The company is facing declining traffic in its two largest markets, the U.S. and China, alongside a notable slowdown in core leggings sales.