Lululemon cuts annual revenue, profit outlook again a week before new CEO takes over

Lululemon reported second-quarter revenue of $2.42 billion. Analysts on average expected $2.46 billion, according to data compiled by LSEG.

Quarterly gross margin, however, increased 200 basis points to 60.5% on the back of tariff refunds of $134.5 million plus associated interest of $4.1 million.

Second-quarter revenue in the Americas, where consumer sentiment deteriorated in August and retail sales disappointed in July amid stubborn inflation, declined 8% after rising 1% a year ago.

Revenue in China — which has been a bright spot — also fell 2%, in constant dollars, compared with a 24% increase a year earlier.

Beyond a challenging macroeconomic backdrop, analysts largely attribute the company's troubles to strategic missteps and lackluster product innovation.

Investor attention will be on O'Neill, now that Lululemon has managed to put behind it a bruising proxy fight with founder Chip Wilson. They will look for signs that the Nike veteran can revive sales and restore momentum, after taking the helm next week.

The company, which cut its forecast for the second time for the current year, now expects fiscal 2026 revenue to decline 5% to 7%, compared with its prior forecast of revenue remaining flat or declining up to 1%.

It also pared down expectation for fiscal 2026 earnings per share to $9.48 to $9.73 from its prior forecast of $10.95 to $11.15.

Sept. 3 (Reuters) - Lululemon Athletica on Thursday cut its full-year forecasts again after missing quarterly sales estimates, underscoring the challenges ahead for incoming CEO Heidi O'Neill as she prepares to tackle softening demand and intense competition.