Lululemon is feeling the squeeze, and its CEO says the brand's gotten predictable

Core Insights - Lululemon has acknowledged a decline in customer engagement due to predictable product offerings and stale styles, particularly in lounge and social categories [1] - The company reported a 7% year-over-year increase in net revenue for Q2, reaching $2.5 billion, but profits fell by 5.6% to $370 million, slightly missing revenue expectations [1] - CEO Calvin McDonald highlighted that consumers are spending less on apparel and are more selective, impacting overall sales [2] Financial Performance - Net revenue for the second quarter grew to $2.5 billion, a 7% increase year-over-year [1] - Profit for the same period decreased by 5.6% to $370 million [1] - Full-year profit guidance was reduced due to expected tariff impacts amounting to $240 million [2] Market Reaction - Lululemon's shares dropped over 15% in after-hours trading and have declined more than 46% year-to-date [3] - Analysts have compared Lululemon to mass-market brands like Gap, suggesting this shift could negatively affect its business model [3] Consumer Trends - The company is facing challenges as consumers are spending less on performance activewear and are seeking truly new styles [2] - Analysts noted an excessive number of sales promotions, with over 1,000 items on sale in the brand's digital store, indicating struggles with inventory sell-through [7][8] Strategic Plans - Lululemon plans to increase the proportion of new styles in its offerings from 23% to approximately 35% by next spring [9] - The company aims to refresh iconic items and accelerate the launch of new products [9] - McDonald expressed confidence in the brand's loyal customer base and the path forward to meet customer expectations [10]