Lululemon sees profit, revenue fall after Great Wall backlash

Lululemon shares dropped nearly 20% after the apparel maker reported declining second-quarter revenue and profit, reports Caixin. The drop was attributed to an abrupt sales reversal in China as well as persistent weakness across North America.

For the quarter ended in July, revenue fell 5% year-on-year on a constant-currency basis to $2.42 billion, while net income declined 11.3% to $329 million. Total comparable sales dropped 10%. On the Chinese mainland, revenue slid 2% and comparable sales fell 8%, marking a sharp retreat from the 23% revenue surge recorded in the first quarter.

Interim co-chief executive and chief financial officer Meghan Frank said the quarterly revenue shortfall stemmed primarily from the China market, where negative social-media sentiment hurt store traffic and lukewarm product launches slowed momentum. Chief commercial officer Andre Maestrini attributed the online backlash to a late-May yoga campaign at the Great Wall. The event sparked public scrutiny after brand ambassador Zhu Yilong played a ceremonial drum that critics and traditional musicians identified as a Japanese taiko drum rather than a Chinese instrument.