Lululemon's Leadership Vacuum Crushes Stock as Sales Crisis Deepens
Lululemon's (NASDAQ: LULU) stock plummeted 20% after the company released a disastrous earnings report, highlighting the consequences of its leadership vacuum. The athletic apparel retailer has been struggling with sales and execution since former CEO Calvin McDonald left in April.
The company announced new CEO Heidi O'Neill on April 22, but she won't start until September 8, leaving co-CEOs Meghan Frank and André Maestrini to manage the business for nearly five months. This prolonged delay has further damaged execution at Lululemon, with insiders saying it's made a bad situation worse.
The company's third-quarter revenue guidance implies a year-on-year decline of 10% to 11%, with North America expected to fall by a mid-teens percentage during the same period. Full-year earnings are now projected to land between $9.48 and $9.73 per share, down from the prior guidance range of $10.95 to $11.15.
Analysts are warning that the damage is far from contained, with Guggenheim's Simeon Siegel saying the company faces 'even greater pressure' on its top line looking into next year. Jefferies' Randy Konik captured the bleak outlook succinctly, saying 'There are plenty more lemons to squeeze before this one turns.'