For the quarter ending 2 August 2026, the company reported lower than expected revenue at $2.4bn, down 4% from $2.53bn in the previous year.
This was driven by an 8% decline in the Americas and China mainland, where revenue grew 4%. International net revenue increased 4%.
Comparable sales declined by 9% overall during the quarter. In the Americas, comparable sales fell by 12%, while international comparable sales recorded a 3% decrease.
During the company’s earnings call, interim co-CEO and chief financial officer (CFO) Meghan Frank said: “As we moved into Q2, we faced negative commentary in the media and social channels, which impacted traffic and softer than planned response to some new product launches, which contributed to a moderating sales trend.”
Highlights from Q2
Lululemon reported gross profit of $1.5bn in Q2, a decrease of 1%, but gross margin improved by 200 basis points to 60.5%. The margin increase was bolstered by $134.5m in tariff refunds, which boosted the measure by 560 basis points.
The company’s income was also down 13% year-on-year to $453.7m, and operating margin narrowed by 190 basis points to 18.8%.
Net income dropped from $370.9m a year earlier to $329.22m in the latest quarter, which translates to diluted earnings per share of $2.92, down from $3.10 in the same period last year including $0.86 per share relating to the tariff refunds and associated interest.
Despite the weaker sales, the company continued shareholder returns and expansion, repurchasing 2.7 million shares for $330m and opening nine net new company-operated stores, taking its total to 825 worldwide.
FY 2026 Outlook
Reflecting on the subdued results and ongoing market headwinds, Lululemon lowered its financial forecasts for the remainder of the year.
For the third quarter of 2026, the company anticipates net revenue between $2.29bn and $2.32bn, equating to a 10% to 11% decline, and diluted earnings per share of $0.93 to $0.98.
For the full 2026 fiscal year, net revenue is now estimated at $10.35bn to $10.5bn, a drop of 5% to 7%. Previously, the company expected full-year net revenue between $11.0bn and $11.15bn.
Lululemon also lowered its diluted earnings per share (EPS) to land between $9.48 and $9.73, down from $10.95 to $11.15.
The annual earnings guidance includes the benefit of second-quarter tariff refunds and associated interest, but does not account for additional future refunds or share repurchases.
Meghan Frank said: "While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook. Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management.
“Looking ahead, we have confidence in the strength of the lululemon brand, the deep connection we have with our guests and ambassadors, and the significant opportunities we see to drive long-term growth."
