Lululemon Sinks 20% After Second Guidance Cut: Michael Burry Calls It a Fat Pitch Below $100
Lululemon (LULU) shares fell 20% to $97.85 after cutting full-year EPS guidance for the second time, citing weaker demand. Q2 revenue missed estimates at $2.42B, with North American comps down 12% and leggings sales down 20%. Michael Burry called shares below $100 a 'fat pitch,' citing $1.3B in cash. Peers Nike (NKE) and Dick's Sporting Goods (DKS) are down 38% and 29% YTD, respectively.
How this was made
The 30-second read
Why it matters
The guidance cut is the primary catalyst for the 20% price decline, indicating a material shift in demand outlook.
Market read
The fresh guidance downgrade and sizable price drop make LULU a near‑term trading focus for short‑term traders and value investors.
What to watch
Upcoming CEO transition on Sep 8 and a one‑time tariff refund that inflated EPS may mask underlying operational issues.
Background
Lululemon reported Q2 FY2026 results, missed revenue estimates, and issued a second full‑year guidance cut in the same year.
Ticker impact
Lululemon cut FY2025 EPS guidance to $9.48‑$9.73 and reported Q2 revenue miss, sending the stock down 20% to $97.85.
Further short‑term pressure likely; price could test $90‑$85 if sales trends persist.
A double‑digit price drop on fresh guidance for a large‑cap retailer typically leads to continued volatility until new data emerges.
Market effects
Athletic‑apparel segment faces heightened scrutiny; peers like Nike and Dick's may see spillover weakness.
North America sales slowdown drives broader retail caution in U.S. markets.
The downgrade adds to a bearish tone for global consumer discretionary stocks.
Counterpoint
Michael Burry views the sub‑$100 price as a "fat pitch" given Lululemon's $1.3 bn cash pile and no debt.
Key entities
- companyLululemon Athletica
Athletic‑apparel retailer (NASDAQ:LULU) that issued the guidance cut.
- individualMichael Burry
Investor who called the sub‑$100 price a "fat pitch" in a Substack post.
