Lululemon Shares Fall in After-Hours Trading After Weak Q2 Forecast

Lululemon shares dropped sharply in after-hours trading—tumbling about 22%—after the athleisure brand issued a weaker-than-expected forecast for the second quarter and cut its full-year profit outlook. The steep decline would mark the stock’s worst intraday drop since March 2017 if it holds during regular trading, adding to the company’s troubles this year as shares are already down roughly 13.5%.

The company reduced its annual profit guidance and warned that second-quarter revenues will fall between $2.45 billion and $2.475 billion, representing a 2% to 3% year-over-year decline. This weak Q2 guidance came even though Lululemon’s first-quarter earnings slightly beat Wall Street forecasts, showing that investors are more concerned about the future outlook than past results.

Lululemon acknowledged that significant work remains for its turnaround strategy, citing undisclosed headwinds affecting the business. The painful stock reaction reflects growing worries about the pace of the company’s recovery and broader concerns about consumer spending in the athletic apparel market. SGB