Lululemon Athletica (NASDAQ:LULU), a premium yoga-inspired athletic apparel company, closed at $100.61, down 17.38%. Shares fell after the company cut its full-year revenue and earnings outlook again, and investors will be watching to see how effectively the new CEO can turn things around.
Trading volume reached 37.1 million shares, coming in about 1,000% above its three-month average of 3.37 million shares. Lululemon IPO'd in 2007 and has grown 704% since going public.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) closed at 7,718, down 0.38%, while the Nasdaq Composite (NASDAQINDEX:^IXIC) finished at 26,507, down 0.29%. In athletic apparel stocks, Nike (NYSE:NKE) closed at $38.40, down 0.95%, while Deckers Outdoor (NYSE:DECK) closed at $85.81, up 1.55%, offering a mixed read on premium brand demand.
What this means for investors
Lululemon's woes went from bad to worse today as the already-struggling stock cratered. Q2 net revenue fell 4% to $2.4 billion year-on-year, and the firm expects its Q3 revenue to be between $2.29 billion and $2.320 billion -- down around 10% on the year before. Today's falling revenue and guidance cut follow several difficult years, and the stock has fallen over 51% year-to-date.
One significant issue for Lululemon is that it has had two interim Chief Executive Officers for over seven months. The incoming CEO, Heidi O'Neill, is due to take the helm this month, but such a long period of placeholder leadership is bound to have an impact, particularly at a time when the firm needed to make a decisive turnaround.
Analysts, including JPMorgan, lowered their price targets for the stock as concern grew that recovery would take time. Lululemon remains a recognizable brand, but it is losing market share, and O'Neill will have her work cut out to reinvigorate the sportswear maker's sales.
JPMorgan Chase is an advertising partner of Motley Fool Money. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Deckers Outdoor, JPMorgan Chase, and Nike. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy.