Lululemon shares dropped as much as 20% in after-hours trade on Thursday after the athleisure company cut its revenue and profit forecasts. The company reported that second quarter fiscal 2026 revenue decreased 4% to $2.4 billion, while comparable sales fell 9%.

For the full year of 2026, Lululemon now expects net revenue to fall between 5% and 7%, placing the range between $10.35 billion and $10.5 billion. The company also revised its adjusted earnings per share expectations to a range of $9.48 to $9.73.

"While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook," said Meghan Frank, Interim co-CEO and CFO.

The financial updates arrive as Nike veteran Heidi O'Neill prepares to take over as CEO next week. David Swartz, a senior equity analyst at Morningstar, told Yahoo Finance that the company likely aims to set low expectations due to uncertainty. Swartz noted that while the company has no debt, the primary issue is sales growth.

Lululemon has faced several challenges this year, including a share price drop in April following the announcement of O'Neill as the next CEO. Additionally, in May, the company reached a settlement with founder Chip Wilson regarding a long-running dispute over board leadership, which included contention over the selection of O'Neill.