Revenue fell 4% to $2.4 billion and comparable sales dropped 9%, while management outlined plans to strengthen products and marketing ahead of incoming CEO Heidi O’Neill’s arrival.
Lululemon Athletica (LULU) reported declining second-quarter fiscal 2026 sales and lowered its full-year outlook as weakness in the Americas continued to weigh on the athletic apparel company’s performance.
Net revenue decreased 4% year over year to $2.4 billion, or 5% on a constant-currency basis. Comparable sales declined 9%, including a 12% drop in the Americas. International revenue provided some offset, increasing 4%, or 2% in constant currency, although international comparable sales declined 3%.
Gross profit slipped 1% to $1.5 billion, while gross margin expanded 200 basis points to 60.5%. However, the quarter benefited significantly from $134.5 million in tariff refunds, which boosted gross margin by 560 basis points.
Operating income fell 13% to $453.7 million, with operating margin declining 190 basis points to 18.8%. Diluted earnings per share fell to $2.92 from $3.10 a year earlier. The tariff refunds and associated interest contributed $0.86 per share to quarterly earnings.
Management adopted a more cautious outlook following the results. For the third quarter, Lululemon expects revenue between $2.29 billion and $2.32 billion, representing a 10% to 11% decline. Diluted EPS is projected between $0.93 and $0.98.
For fiscal 2026, the company now forecasts revenue of $10.35 billion to $10.50 billion, representing a 5% to 7% decline. Full-year diluted EPS is expected between $9.48 and $9.73.
Interim Co-CEO and CFO Meghan Frank said Lululemon is focused on strengthening its product offerings, increasing marketing investments and maintaining disciplined expense management.
The company ended the quarter with $1.4 billion in cash and equivalents and repurchased $330 million of stock. Inventory declined 1% in value and 7% on a unit basis.
Lululemon is also preparing for a leadership transition, with incoming CEO Heidi O’Neill expected to take the helm next week.
The challenge ahead will be restoring growth—particularly in the Americas—while protecting the premium positioning and profitability that have historically defined the Lululemon brand.
