Lululemon Q2 2026 earnings: profit beats, but sales slump deepens and outlook is slashed
Lululemon beat profit estimates but missed on revenue as sales fell, and it sharply cut its full-year outlook as a new CEO takes over.
| Q2 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $2.06 | $1.83 | +12.5% |
| Revenue | $2.42B | $2.51B | -3.7% |
Key takeaways
- Profit came in above Wall Street’s expectations, but revenue fell short and was down about 4% from a year earlier, as comparable (same-store) sales sank 9% for the quarter.
- The sales slump was concentrated at home: comparable sales in the Americas, Lululemon’s biggest market, dropped 12%, while sales outside North America fell only 3% — a sign international growth is currently masking a deeper U.S. and Canada problem.
- This quarter’s gross margin got an unusual lift from a one-time $134.5 million tariff refund; without items like that, underlying profitability is still being squeezed by tariff costs and spending on new stores and distribution capacity.
- Management sharply cut its outlook for the full fiscal year: revenue is now expected to fall 5-7% to $10.35-$10.5 billion, down from earlier guidance of $11-$11.15 billion, and profit guidance was lowered to $9.48-$9.73 per share from $10.95-$11.15 previously.
- For the current quarter, the company guided to an even steeper roughly 10-11% revenue decline, suggesting the turnaround will take longer than investors had hoped.
- The results land just as Heidi O’Neill is set to formally become CEO next week, following a settled proxy dispute with founder Chip Wilson; she now faces the job of resetting product strategy and stabilizing the struggling North America business.
- Over the trailing twelve months, earnings per share have fallen roughly 16% even though revenue grew modestly, underscoring how tariffs and cost pressures have been eating into profitability well before this quarter’s results.
- Investors reacted sharply to the weaker outlook, sending shares down about 15% on the day, reflecting concern that the business’s problems are proving more persistent than expected.
Q2 2026 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $2.4B | $2.5B | -4.3% |
| Net income | $329M | $371M | -11.2% |
| Free cash flow | $225M | $151M | +49.3% |
| Diluted EPS | $2.92 | $3.10 | -5.8% |
| Gross margin | 60.5% | 58.5% | +2.0 pts |
| Operating margin | 18.8% | 20.7% | -2.0 pts |
| Net margin | 13.6% | 14.7% | -1.1 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
Lululemon Athletica Inc closed at $120.07 on Sep 2, 2026, the last session before the report, and at $100.61 on Sep 4, 2026, the first session after it — -16.2% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 55.7% | Trailing 12 months |
| Operating margin | 18.3% | Trailing 12 months |
| Net profit margin | 13.0% | Trailing 12 months |
| Pretax margin | 18.5% | Trailing 12 months |
| EPS | $12.38 | Trailing 12 months |
| Revenue growth (YoY) | 4.2% | Trailing 12 months |
| EPS growth (YoY) | -16.1% | Trailing 12 months |
| Return on equity | 31.3% | Trailing 12 months |
Sources: CNBC · company report