Lululemon CEO transition delay compounds sales decline and 20% stock drop

September 4, 2026 at 02:45 PM2 min

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Lululemon reported a 10% drop in comparable sales for the second quarter and cut its third-quarter revenue guidance to a 10-11% decline. The stock fell 20% in early trading Friday, adding to a 42% decline this year. The company's new CEO, Heidi O'Neill, does not start until September 8, leaving interim co-CEOs Meghan Frank and André Maestrini in charge.

Key Facts

Lululemon's comparable sales fell 10% in the second quarter, with North America comparable store sales down 12%.
Sales of Lululemon's iconic leggings dropped 20% in the quarter.
The company's third-quarter revenue guidance implies a 10% to 11% year-on-year decline.
Lululemon's stock fell 20% in early trading Friday, adding to a 42% decline this year before the report.
New CEO Heidi O'Neill, a former Nike executive, starts on September 8, more than four months after her April 22 announcement.

CEO Transition Delay

Lululemon announced Heidi O'Neill as its new CEO on April 22, but her start date is September 8. The company is led on an interim basis by co-CEOs Meghan Frank and André Maestrini, who previously worked under former CEO Calvin McDonald. The long delay in O'Neill's official start date has further damaged execution at the company, according to people familiar with the situation. Interim leadership is focused on keeping operations running and working through unwanted inventory until O'Neill arrives.

Sales Decline

Total comparable sales fell 10% in the second quarter, while North America comparable store sales dropped 12%. Sales in the women's category declined 4%, and sales of the brand's iconic leggings fell 20%. The company's third-quarter revenue guidance implies a 10% to 11% year-on-year decline, with North America down a mid-teens percentage. Guggenheim analyst Simeon Siegel said the guidance suggests greater pressure on the top line into next year, describing it as another cut along a stretch of a 'thousand cuts' rather than a 'kitchen sink'.

Market Position

Lululemon's once-formidable market share in sportswear continues to be eroded by product missteps from the previous leadership team. Newer sportswear brands like Alo and Vuori have gained popularity amid Lululemon's inconsistent execution. The stock fell 20% in early trading Friday after the earnings report and guidance cut.