Lululemon shares dive as challenges keep investors at bay ahead of new CEO's tenure

Following the results, at least 12 brokerages lowered their price objectives for the shares, with Piper Sandler setting the Street-low target of $80, according to data compiled by LSEG.

Lululemon's shares trade at about 11.50 times forward earnings, compared with 20.76 for peers Nike NKE.N and 13.41 for Adidas ADSGn.DE.

"In our view, last night's decidedly downbeat quarterly announcement is now apt to unnerve meaningfully even longer-term-oriented investors examining the name," said Brian Nagel, analyst at Oppenheimer Research, in a note.

Investors should await an initial game plan from O'Neill before considering a more constructive stance on shares, he added.

O'Neill, a former Nike executive, will be tasked with reviving demand in North America, Lululemon's largest market, and restoring growth.

Revenue in the Americas fell 8% from a year earlier in the second quarter, compared with a 1% increase the previous year, as the firm struggled to reignite demand amid slow consumer spending impacted by inflationary pressures.

Sales could deteriorate further in the second half, Morgan Stanley said, with limited visibility on when demand might recover, raising the risk of continued pressure on margins.

Sept. 4 (Reuters) - Shares of Lululemon Athletica LULU.O fell about 18% in premarket trading on Friday after the sportswear maker cut its full-year forecast for a second time, underscoring the string of challenges that await incoming CEO Heidi O'Neill.