Lululemon's stock closed at $100.61 on Friday, down 17.38% in a single session, as the company faces a triple threat: a founder's divorce without a prenuptial agreement, a third sales forecast cut this year, and a new CEO starting this week. The shares are now roughly 80% below their December 2023 peak of $511.29.
The stock slide and repeated forecast cuts
Friday's drop pushed the stock to eight-year lows, a level not seen since early September. The company has cut its sales forecast three times this year, lowering its 2026 outlook from $11.35 billion in March to $10.35 billion now. Second-quarter revenue fell 4% to $2.4 billion, with comparable sales down 9%. Earnings of $2.92 a share included a one-off $134.5 million refund on import tariffs, which masked the underlying weakness.
The company expects third-quarter sales to fall another 10% to 11%. That's a steep decline for a brand that was growing double digits just a couple of years ago.
The founder's divorce and the shares at stake
Chip Wilson, who founded Lululemon, is divorcing without a prenuptial agreement. Wilson and connected entities hold 9.9 million shares, or 8.7% of the company, worth just under $1 billion at Friday's close. Roughly 1.1 million of those shares are already attributed to Summer Wilson, his wife.
British Columbia law protects what each spouse owned before marriage, but growth during marriage is split evenly by default. The couple wed in 2002, five years before Lululemon went public in 2007. That means the stock's appreciation since the IPO is likely subject to division. With the shares down so much, the value of that growth is far smaller than it was at the peak, but the divorce could still force a sale or transfer of a significant block.
Wilson ended a campaign to unseat directors in May, accepting two board seats and an 18-month truce. That truce doesn't cover his personal life, and the divorce adds a new layer of uncertainty for shareholders.
What the new CEO inherits
Heidi O'Neill starts as CEO this week. She inherits falling sales and a shrinking North American business, which has been the company's core market. The repeated forecast cuts suggest the problems aren't easing. O'Neill will have to address the comparable sales decline, the inventory issues, and the brand's fading momentum.
Investors will be watching her first moves closely. The company's next earnings report, due in early December, will show whether the third-quarter sales decline matches the 10% to 11% guidance. That report will also be the first test of O'Neill's strategy.
