VANCOUVER, September 4 — $2.4 billion. That’s the headline number for Lululemon Athletica’s second quarter, and investors will note it’s heading the wrong way. Net revenue dropped 4% year-over-year for the three months ended August 2, 2026, or 5% on a constant dollar basis.
Comparable sales fell 9%, or 10% stripping out currency effects. The bottom line looks sturdier than the top, at first glance.
Diluted earnings per share came in at $2.92. But peel that back and the figure that matters is less impressive. A $134.5 million International Emergency Economic Powers Act tariff refund, plus $4.1 million in associated interest, padded results.
The refund cut cost of goods sold; the interest boosted other income. Together they added $0.86 per share.
Without that one-time tailwind, the earnings picture changes substantially. By the numbers, the balance sheet still carries weight. Cash and cash equivalents stood at $1.4 billion as of quarter-end.
The company had $593.7 million available under its committed revolving credit facility. Inventories edged down 1% to $1.7 billion versus the end of the second quarter of 2025; on a unit basis, they dropped a more meaningful 7%.
Leadership in Transition, Outlook Cut
Interim Co-CEO and Chief Financial Officer Meghan Frank struck a cautious tone. She said the company is taking a prudent approach with its revised full-year outlook, concentrating on three fronts: strengthening product offerings, increasing marketing investments, and maintaining disciplined expense management. Her co-leader, Interim Co-CEO, President, and Chief Commercial Officer André Maestrini, expressed confidence in Lululemon’s ability to take the right steps to strengthen performance and deliver sustainable growth.
Maestrini also welcomed incoming CEO Heidi O’Neill, who is expected to join next week. The leadership handover comes at a critical moment.
Guidance: A Steeper Decline Ahead
For the third quarter, Lululemon projected net revenue between $2.290 billion and $2.320 billion — a decline of 10% to 11%. Diluted EPS is expected to land between $0.93 and $0.98, assuming a tax rate of approximately 30%. The full-year picture darkened.
The company now expects fiscal 2026 net revenue between $10.350 billion and $10.500 billion, down 5% to 7%. Diluted EPS guidance is set at $9.48 to $9.73, again assuming roughly a 30% tax rate.
Both ranges include the $0.86 per share second-quarter tariff benefit. They exclude any further potential tariff refunds or future share repurchases. The company will hold a conference call to discuss results on September 3, 2026, at 4:30 p.m. Eastern time.
What to Watch
Investors will be tracking whether O’Neill’s arrival next week accelerates strategic shifts. The tariff refund is already in the rearview mirror, so the core business trajectory becomes the figure that matters. Marketing spend is going up, but comparable sales are sliding at a double-digit clip.
The inventory unit reduction suggests tighter buying, yet revenue is falling faster. Further IEEPA refunds remain uncertain — and Lululemon’s guidance explicitly banks on none.
Lululemon, founded in 1998 by Chip Wilson and headquartered in Vancouver, built its name on yoga-inspired athletic wear. The brand still operates globally. Now it must prove it can grow again without relying on customs windfalls.
