Michael Burry, head of Scion Asset Management, previously made a significant purchase of Lululemon shares around $238. After the company released its Q2 fiscal 2026 earnings report, the stock price fell by about 18% in after-hours trading, reaching around $99.6.

According to the 13F filing, Scion established a new position of 50,000 shares in Q2 2025 at an average reported price of about $237.58; in Q3, it added another 50,000 shares for a total of 100,000 shares at an average reported price of about $177.93, with the stock at one point accounting for over 20% of its publicly disclosed equity position. Tracking data estimates its average purchase cost at about $238, and the market value of its holdings has significantly decreased following the stock price drop.

Lululemon reported net revenue of $2.416 billion for the quarter, a 4% year-over-year decline, and a 5% decline at constant currency; global comparable sales fell by 9%, with a 12% decline in the Americas, an 8% decline in the U.S., and a roughly 9% decline in Canada at constant currency. Revenue from mainland China increased by 4% on a reported basis but decreased by 2% at constant currency, with comparable sales down 8% at constant currency, which management described as below expectations.

Diluted earnings per share were $2.92, down from $3.10 in the same period last year; net profit was $329.2 million, an 11% decline. Gross margin was reported at 60.5%, which included $134.5 million in tariff refunds and $4.1 million in related interest, with the refunds alone boosting the gross margin by about 560 basis points; excluding one-time factors, operating margin was still pressured by weak traffic in the Americas and promotional pressures. Cash at the end of the quarter was about $1.4 billion, with inventory around $1.7 billion, and the company repurchased 2.7 million shares at a cost of $330 million during the quarter.

Full-year guidance has been lowered again: net revenue is expected to be between $10.35 billion and $10.50 billion, a year-over-year decline of 5% to 7%; diluted earnings per share are projected to be between $9.48 and $9.73, including about $0.86 from the tax refund contribution, significantly lower than the previous range of $10.95 to $11.15. Q3 revenue guidance is set at $2.29 billion to $2.32 billion, a year-over-year decline of 10% to 11%, with earnings per share of $0.93 to $0.98. Since the end of 2025 until September 2026, Burry has repeatedly referred to the stock as "ear-piercingly cheap," noting that only 2 out of 32 analysts have given a buy rating.

The after-hours sell-off was driven by the lowered guidance, with growth funds and momentum investors accelerating their sell-offs after negative revenue and double-digit declines in same-store sales in the Americas; the buying support mainly came from value funds waiting for the new CEO Heidi O’Neill to take office on September 8, as well as buyers re-evaluating based on book value and cash flow. Brand owners and repurchase accounts provided limited support, while short sellers and event-driven hedge funds benefited, putting pressure on heavily invested long positions and accounts following Burry's lead.

The stock closed at $121.77, with after-hours quotes around $99.6; market capitalization fell from about $13.8 billion to a lower tier. Burry stated before and after the earnings report that Lululemon has become a "troublemaker" in his portfolio and is his largest position.

Source: Public Information