Lululemon Cuts Full-Year Guidance as Americas Sales Slide and Founder's Divorce Puts a $930 Million Stake in Play

LULU cut its full-year outlook on both lines that matter. Lululemon now guides to full-year revenue of $10.35 billion to $10.50 billion, down from a prior forecast of $11 billion to $11.15 billion, and to full-year earnings of $9.48 to $9.73 per share against a previous range of $10.95 to $11.15. The third-quarter guide is for revenue of $2.29 billion to $2.32 billion and earnings of 93 cents to 98 cents per share. Second-quarter revenue was $2.42 billion, which missed expectations, even as adjusted earnings of $2.92 per share cleared the $1.80 estimate.

The weakness is concentrated rather than broad. Americas revenue declined 8% with comparable sales down 12%, and leggings, the franchise the brand was built on, fell 20% in the quarter. That distinction matters: this is a demand and product problem in the company's home market against a cost base sized for a larger business, not a uniform global slowdown. Shares closed at $98.97 on September 11, near a 52-week low of $95.67 and far below the 52-week high of $225.98, and were down 41.4% year to date as of Thursday.

The sell-side response was a repricing rather than a wave of downgrades, a distinction several headlines blurred. Jefferies kept a Hold and cut its price target to $105 from $115, BofA Securities reiterated Neutral, and Citi lowered its target to $117 from $130. SentiSense's own consensus reads a $44.00 low, $105.65 average and $255.00 high across 27 analysts, with a buy/hold/sell split of 1 buy, 29 hold and 5 sell among 35 rated firms. That average sits almost exactly at the last close, so the Street is priced for stabilization, not recovery.

Running alongside the operating story is an ownership question. Founder Chip Wilson is divorcing after nearly 25 years of marriage with no prenuptial agreement, which places his Lululemon stake, worth roughly $930 million, under scrutiny; Wilson and affiliated entities beneficially owned about 8.7% of the company. His wider fortune is estimated at about $6 billion and includes roughly 17% of Amer Sports, valued near $2.8 billion. Wilson has separately agreed to an 18-month standstill and limits on public criticism of the company. A forced sale is not the base case, since settlements of this size are typically met with other assets, but the possibility adds an overhang while the shares sit near their lows.

What to watch from here is whether Americas comparable sales stop deteriorating and whether the product reset reaches the leggings line, since that is where the 20% decline originated. The guidance cut has reset the bar; the question is whether the third-quarter range of $2.29 billion to $2.32 billion proves conservative enough to clear.