Lululemon Athletica Inc. (LULU) fell 17 percent following its fiscal second quarter 2027 results, prompting JPMorgan analyst Matthew Boss to cut his price target to $95 from $154—a 38 percent reduction. Boss maintained a Neutral rating.
The miss was stark. Q2 revenue fell 4 percent to $2.4 billion, with comparable sales down 10 percent year over year. North America—Lululemon's largest market—posted a 12 percent comp decline as store traffic slowed and new product launches failed to gain traction. China, once a growth engine, showed signs of deterioration: revenue rose only 4 percent and fell 2 percent on a currency-adjusted basis, with comps down 8 percent. Management blamed negative online sentiment and a weaker Tmall shopping event.
The guidance cut was more damaging. Full-year revenue guidance fell to $10.35 billion to $10.5 billion, a 5 percent to 7 percent decline. Full-year EPS plunged to $9.48 to $9.73 from $13.26 last year. For Q3, Lululemon projects revenue of $2.29 billion to $2.32 billion (down 10 to 11 percent) and EPS of $0.93 to $0.98, down from $2.59 in the prior year. Operating margin is forecast at 6.5 percent versus 17 percent a year ago.
Boss flagged that Q3 EPS guidance sits roughly 60 percent below Wall Street consensus—a gap substantial enough to warrant his aggressive target cut. He cited margin compression as the core driver: revenue is declining while marketing spend and store investments remain elevated, creating a scissors effect on profitability over the next 12 months.
Management is pursuing a turnaround centered on SKU rationalization and product focus. The stock has underperformed the broader market over five years, trading nearly 80 percent below its all-time highs even as the S&P 500 approaches records.
