Lululemon shares plunged about 20% in premarket trading Friday after the athletic-wear company cut its annual outlook again, leaving incoming CEO Heidi O’Neill with a worsening sales problem just days before she takes control.
The stock traded around $96.91 before the open, a move that could erase roughly $2.8 billion in market value. Lululemon shares have already fallen more than 40% in 2026 as investors question whether the once-dominant premium athleisure brand can revive demand.
Second-quarter revenue fell 4% year over year to $2.42 billion, missing analysts’ roughly $2.46 billion estimate. The Americas, still Lululemon’s largest market, weakened further with revenue down 8%.
Lululemon’s leggings problem gets harder to ignore
The most concerning number may be inside the product mix.
Sales of Lululemon’s signature leggings fell approximately 20%, according to Reuters, highlighting weakness in a category that helped build the company into a global athletic-apparel powerhouse.
Management has struggled with inconsistent new-product launches, increased promotions and changing fashion preferences as competitors such as Alo Yoga and Vuori gain consumer attention.
| Q2 2026 | Result |
|---|---|
| Revenue | $2.42B |
| Analyst estimate | $2.46B |
| Americas revenue | -8% |
| Leggings sales | ~-20% |
| Premarket stock move | ~-20% |
The weakness contrasts sharply with Lululemon’s position only two years ago. In fiscal 2024, company revenue grew 10% to $10.6 billion, while management was still reporting growth across regions and merchandise categories.
Another forecast cut raises stakes for Heidi O’Neill
Lululemon now expects fiscal 2026 revenue to decline 5% to 7%, with sales projected at roughly $10.35 billion to $10.5 billion.
Adjusted earnings are expected at $9.48 to $9.73 per share, sharply below the previous $10.95-to-$11.15 range.
The deteriorating outlook lands immediately before Heidi O’Neill takes over on Sept. 8. The former Nike executive has experience in brand management, merchandising and consumer strategy: areas investors increasingly view as central to Lululemon’s recovery.
Coinpaper’s earlier look at the earnings selloff showed how quickly investors punished the latest forecast cut. The bigger question now is whether the cheaper valuation represents an opportunity, or simply reflects expectations that the turnaround could take years.
Lululemon is still expanding its physical footprint, with store square footage up about 11% year over year. That creates another tension for O’Neill: the company continues carrying a cost structure built for growth while its largest market is shrinking.
The new CEO therefore inherits more than a bad quarter.
She inherits a brand that must prove its signature products can become desirable again before expansion turns from an advantage into an additional burden.
