Can Lululemon Stocks Stage a Turnaround, or Is It Time to Throw in the Towel?

Lululemon Athletica's (LULU 8.56%) tough year just got worse after the company lowered its full-year guidance following its fiscal first-quarter results. The stock is now down about 45% on the year and 65% over the past year, as of this writing. Let's take a closer look at the apparel company's most recent results and prospects to see whether a turnaround is near or it's time to throw in the towel. Image source: The Motley Fool. The struggles continue While Lululemon reported slightly better-than-expected Q1 results, the company lowered full-year guidance, noting it began to see moderating sales trends in the quarter. It blamed negative commentary both in the press and on social media, while saying some product launches fell flat, including its New Look of Yoga campaign. While the company said it is moving with urgency, Lululemon's new CEO is not coming on board until September. The former CEO announced his departure in December, so the struggling company will essentially go nine months without permanent leadership. For the first quarter, Lululemon's overall revenue rose 4% year over year to $2.47 billion, coming in ahead of the $2.43 billion consensus, as compiled by LSEG. Adjusted earnings per share (EPS) tumbled 35% to $1.69 but edged past the $1.68 consensus. Today's Change(-8.56%) $-10.69Current Price$114.23 Once again, there was a big convergence between Lululemon's North American and international results. Americas revenue sank by 3%, while comparable-store sales decreased by 5%. International revenue, meanwhile, jumped 22%, with same-store sales rising 13%. China's revenue soared 30%, while same-store sales climbed 13%. Gross margin declined by 410 basis points to 54.2%, hurt by tariffs and fixed cost deleveraging. The company expects gross margins to decrease by 90 basis points this fiscal year. Looking ahead, Lululemon forecast sales in a range of $11 billion to $11.15 billion, representing a 1% decline to break even. It now expects adjusted EPS in a range of $10.95 to $11.15. That compares with earlier guidance for EPS of $12.10 to $12.30 on sales of between $11.35 billion and $11.5 billion, representing growth of 2% to 4%. The company expects sales to fall by 2% to 3% in fiscal Q2. Can the stock rebound? Lululemon will essentially remain a rudderless ship until September, when former Nike exec Heidi O'Neill will take over the helm. However, the end of her time at Nike is not exactly remembered fondly, as she played key roles in the company's struggles under former Nike CEO John Donahoe. While Lululemon stock is cheap, trading at a forward price-to-earnings (P/E) ratio of under 10.5 times, I'd prefer to see some progress made, or at least the new CEO's plan, before jumping into the name.Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc. and Nike. The Motley Fool recommends London Stock Exchange Group Plc. The Motley Fool has a disclosure policy.