Lululemon (LULU) Stock Plunges 18% Post-Earnings as Michael Burry Doubles Down Below $100

Key Takeaways

• LULU shares plummeted 18% in after-hours trading following a disappointing fiscal Q2 earnings report
• Second quarter revenue declined 4% year-over-year to $2.42 billion, with comp sales falling 9%
• The athleisure brand reduced its 2026 annual sales forecast, now projecting a 5%-7% decrease
• Investor Michael Burry, whose portfolio is 17.4% allocated to LULU, labeled it a “trickster” yet pledged to increase his position if shares fall below $100
• Management attributed the weakness to sluggish North American consumer demand and ongoing challenges in the Chinese market

Shares of Lululemon (LULU) tumbled 18% in extended trading Thursday after the athletic apparel company delivered underwhelming fiscal second quarter results and slashed its annual revenue projections. The sharp decline followed a 1.4% gain during regular market hours.

Lululemon Athletica Inc., LULU

The Vancouver-based retailer reported second quarter sales of $2.42 billion, representing a 4% year-over-year contraction. Comparable store sales experienced a steeper 9% decline, missing analyst projections.

Management also revised downward its full-year financial outlook. The company now anticipates 2026 revenues will contract between 5% and 7%, attributing the reduction to lackluster demand across North American markets and persistent weakness in its Chinese operations.

Interim Co-CEO and CFO Meghan Frank characterized the updated guidance as reflecting a “prudent approach” to current market conditions. She emphasized that internal teams are concentrating on enhancing product assortments, amplifying marketing initiatives, and optimizing operational costs.

“As we transition into Q3, while we are observing positive customer engagement with our activations and certain newer product lines, the broader response to our merchandise launches continues to be uneven,” Frank noted during the company’s earnings conference call.

Notable investor Michael Burry, celebrated for correctly predicting the 2008 housing crisis, entered the earnings announcement with LULU representing his top holding at approximately 17.4% of his investment portfolio.

Burry Labels LULU a “Trickster” Investment

Even with the substantial decline, Burry candidly expressed his dissatisfaction while maintaining his conviction. He characterized Lululemon as a “trickster” stock and acknowledged the position has consistently challenged his resolve.

“Today, lululemon is the trickster in my portfolio. It does seem determined to take me where mermaids fear to tread,” he posted on his Substack publication.

Burry revealed he had anticipated a disappointing quarter and reiterated his core investment principle: either accumulate additional shares or exit the position entirely. He decisively chose accumulation.

“I will buy more of it if it trades under $100 tomorrow morning,” he declared. The stock was hovering near that threshold in after-hours activity.

To justify his patience, Burry referenced historical investment successes. He highlighted Avanti, which he purchased at $12 in 2001, endured watching it decline to the $2 range while continuing to buy, ultimately seeing it acquired at $22 per share. He also mentioned Adobe (ADBE), Molina Healthcare (MOH), and Veeva Systems (VEEV) as examples of holdings that experienced significant drawdowns before eventual recoveries.

LULU Shares Down More Than 40% Year-to-Date in 2026

Burry indicated that trading volume patterns and shareholder composition shifts have increased his confidence in maintaining the position. He suggested that recent buyers at current price levels would demonstrate less inclination to sell.

Prior to Thursday’s after-hours selloff, LULU stock had already depreciated more than 40% during 2026, though Burry has consistently characterized the valuation as “very cheap.”

Frank acknowledged that both North America and China, representing the company’s two most significant geographic markets, continue experiencing brand headwinds as the third quarter unfolds.

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