Lululemon (LULU) stock fell 18% overnight after the company posted a weak fiscal Q2 earnings report and cut its full-year sales guidance. The stock had closed up 1.4% in the regular session before the after-hours selloff.
Lululemon Athletica Inc., LULU
Q2 revenue came in at $2.42 billion, down 4% year over year. Comparable sales dropped 9%, a larger decline than Wall Street had expected.
The company also lowered its full-year outlook. Lululemon now expects 2026 sales to fall between 5% and 7%, citing weak demand in North America and continued underperformance in China.
Interim Co-CEO and CFO Meghan Frank said the company is taking a “prudent approach” with its revised outlook. She added that teams are focused on strengthening product offerings, increasing marketing, and managing expenses.
“As we move into Q3, while we are seeing good guest reaction to our activations and some of our newer styles, the overall response to our product launches remains inconsistent,” Frank said on the earnings call.
Michael Burry, the investor known for his Big Short trade, held LULU as his largest position going into earnings, making up roughly 17.4% of his portfolio.
Despite the drop, Burry was open about his frustration but stayed committed. He called Lululemon a “trickster” and said the position has repeatedly tested his patience.
“Today, lululemon is the trickster in my portfolio. It does seem determined to take me where mermaids fear to tread,” he wrote on Substack.
Burry said he had flagged a weak quarter in advance and repeated his investment rule: buy more or sell. He came down on the buy side.
“I will buy more of it if it trades under $100 tomorrow morning,” he said. The stock was trading near that level in after-hours.
Burry pointed to past investments to back up his patience. He cited Avanti, which he bought at $12 in 2001, watched drop into the $2 range, and continued buying before it was acquired at $22 a share. He also referenced Adobe (ADBE), Molina Healthcare (MOH), and Veeva Systems (VEEV) as positions that suffered steep drops before recovering.
Burry noted that volume signals and shareholder base turnover made him more comfortable holding the stock. He said newer holders at current levels would be less likely to sell.
LULU stock had already fallen over 40% in 2026 before Thursday’s drop, yet Burry had continued to call it “very cheap.”
Frank confirmed that both North America and China, the company’s two largest markets, continue to see brand pressure heading into Q3.
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