Jim Cramer Notes lululemon (LULU) is “Executing Really Poorly”
Jim Cramer criticized lululemon (LULU) for poor execution, suggesting a potential drop to $85. Q2 revenue fell 4% to $2.4B, with earnings guidance cut. Hedge fund ownership declined, and short interest is high. The stock is down over 50% from its 52-week high.
How this was made
The 30-second read
Why it matters
The guidance downgrade is likely to trigger further downside pressure and may prompt re‑rating by sell‑side analysts.
Market read
Large‑cap consumer discretionary stock with immediate price impact from earnings guidance cut.
What to watch
Short‑interest at 9‑11% could amplify moves; hedge fund ownership decline may reduce support.
Background
Lululemon reported a weak Q2 with revenue down 4% and comparable sales down 9%, prompting a guidance cut.
Ticker impact
Lululemon cut FY2026 revenue forecast to $10.35‑$10.50B and EPS guidance to $9.48‑$9.73, down from prior ranges, and warned of a 10‑11% YoY Q3 revenue decline.
Potential slide toward $85 target, downside of ~15‑20% from current price.
Guidance reduction is material for a large‑cap apparel retailer; analysts and investors typically price in such cuts quickly.
Market effects
Athleisure sector may see broader pressure as peers could be re‑rated.
U.S. consumer discretionary stocks could face short‑term weakness.
Limited to apparel and consumer discretionary markets.
Counterpoint
If the new CEO can turn product mix and marketing around, the stock may be oversold.
Key entities
- ExecutiveHeidi O'Neill
Interim Co‑CEO commenting on execution challenges.
- ExecutiveMeghan Frank
Interim Co‑CEO discussing product reception.
