Lululemon Stock Plunges as China Sales Miss Expectations

Lululemon Athletica's shares experienced a significant drop, falling more than 20% in pre-market trading on Friday. This decline followed the release of the Canadian apparel company's second-quarter earnings report, which revealed a shortfall in revenue primarily driven by weaker performance in China.

The company reported a 4% year-over-year decrease in revenue, reaching $2.4 billion, missing its own predicted decline of 2% to 3%. While China's revenue saw a 4% increase, this was a substantial slowdown from the 30% growth seen in the previous quarter. US revenue also declined by 8% year-over-year.

Analysts suggest that a public relations misstep in May may have contributed to the slowdown. The company hosted a yoga festival in China that featured Japanese taiko drums instead of traditional Chinese drums, leading to widespread criticism on social media and a public apology from Lululemon.

As a result of the weaker sales, Lululemon has lowered its full-year revenue forecast for 2026 to a range of $10.35 billion to $10.50 billion. The company's stock has already fallen over 42% year-to-date and is trading near its 52-week low.

Looking ahead, Heidi O'Neill, who previously spent 26 years at Nike, is set to take over as CEO on September 8, marking a new leadership chapter for the company.