Lululemon Cuts Full-Year Sales Outlook to $10.35 Billion
The athletic-apparel maker now expects fiscal 2026 net revenue of $10.350 billion to $10.500 billion, a 5% to 7% decline.
lululemon athletica inc. (LULU) lowered its full-year 2026 outlook after a second quarter in which net revenue fell 4% to $2.4 billion and comparable sales dropped 9%, reversing the first-quarter 4% revenue increase.
The company now expects fiscal 2026 net revenue of $10.350 billion to $10.500 billion, a 5% to 7% decline, and diluted earnings of $9.48 to $9.73 a share. In June, it had guided to $11.000 billion to $11.150 billion of sales, a 1% to 0% decline, and earnings of $10.95 to $11.15 a share.
For the third quarter of 2026, lululemon expects net revenue of $2.290 billion to $2.320 billion, a 10% to 11% decline, and diluted earnings of $0.93 to $0.98 a share. In June, it had pointed to $2.450 billion to $2.475 billion of sales, a 3% to 2% decline, and earnings of $1.76 to $1.81 a share. The year-end outlook includes $0.86 a share from tariff refunds and associated interest recognized in the second quarter, net of tax, and does not assume any further refunds or future share repurchases.
The sales turn was sharpest in the Americas. Americas net revenue decreased 8% and Americas comparable sales decreased 12%, after a 3% Americas net-revenue decline and a 5% Americas comparable-sales decline in the first quarter.
International net revenue increased 4%, or 2% on a constant-dollar basis, after a 22% increase in the first quarter. International comparable sales decreased 3%, or 6% on a constant-dollar basis, after a 13% increase. China Mainland net revenue rose 4% and China Mainland comparable sales fell 2%. Rest of World net revenue rose 5% and Rest of World comparable sales fell 4%.
Gross profit decreased 1% to $1.5 billion. Gross margin increased 200 basis points to 60.5%. The company received International Emergency Economic Powers Act tariff refunds of $134.5 million plus $4.1 million of associated interest, which increased gross margin by 560 basis points.
Income from operations decreased 13% to $453.7 million, and operating margin decreased 190 basis points to 18.8%. The tariff refunds increased operating margin by 560 basis points. Diluted earnings were $2.92 a share, compared with $3.10 a year earlier. The tariff refunds and associated interest added $0.86 a share, net of tax.
Selling, general and administrative expenses were $1.006 billion, or 41.7% of net revenue.
The company repurchased 2.7 million shares for $330.0 million. It opened nine net new company-operated stores, ending the quarter with 825 stores. Cash and cash equivalents were $1.4 billion, with $593.7 million of available capacity under its committed revolving credit facility. Inventories at August 2, 2026, decreased 1% to $1.7 billion versus a year earlier and 7% on a unit basis.
Interim Co-CEO and Chief Financial Officer Meghan Frank said the company is taking a prudent approach with its revised full-year outlook and that teams remain focused on accelerating growth by strengthening product offerings, increasing marketing investments, and maintaining disciplined expense management.
Interim Co-CEO André Maestrini said the company looks forward to welcoming incoming chief executive Heidi O'Neill the week after the results.
The 2026 outlook assumes a tax rate of approximately 30%. Guidance and outlook statements are based on management’s expectations as of September 3, 2026, and do not incorporate future unknown impacts, including tariffs and macroeconomic trends.