The legal scrutiny follows a series of disappointing disclosures that eroded investor confidence. The downward trajectory began in April when the company announced the appointment of Heidi O'Neill as CEO, a move that met with significant analyst skepticism and sent shares sliding 13.3%. By June, the company revealed a 4% year-over-year decline in gross margins, citing negative product reception and lackluster new launches.

The most severe blow arrived in September, when Lululemon reported a 4.3% drop in revenue and a 10% decline in same-store sales. Notably, core categories such as leggings and women's tops saw demand plummet by 20%. Management responded by slashing fiscal 2026 guidance, with third-quarter earnings expectations falling 60% below market consensus. Investors interested in the ongoing investigation can access further details via the firm's legal portal.