Comparable sales at lululemon fell 9% in the second quarter, and the company says it now expects less from the rest of the year than it did three months ago. In a statement issued after the market closed on September 3, 2026, the athletic apparel maker reported results for the quarter that ended August 2.
What the quarter looked like
Net revenue slipped 4% to $2.4 billion (5% at constant dollars). Comparable sales dropped 9%, or 10% at constant dollars. The split by region was uneven. Net revenue in the Americas decreased 8% and comparable sales there decreased 12%, while international net revenue rose 4%, or 2% on a constant dollar basis. International comparable sales still decreased 3%, or 6% on a constant dollar basis.
Gross profit decreased 1% to $1.5 billion, yet gross margin increased 200 basis points to 60.5%. That jump had a one-time cause. Lululemon received $134.5 million in tariff refunds under the International Emergency Economic Powers Act, plus $4.1 million in associated interest, and booked the refunds as a reduction of cost of goods sold. By the company’s own arithmetic the refunds added 560 basis points to gross margin.
Income from operations decreased 13% to $453.7 million, and operating margin decreased 190 basis points to 18.8%. Diluted earnings per share came to $2.92, against $3.10 a year earlier. The company said $0.86 of this year’s figure came from the tariff refunds and interest, net of tax. The effective income tax rate was 29.6%, compared with 30.5% in the second quarter of 2025.
Stores, buybacks and the balance sheet
Lululemon repurchased 2.7 million of its shares at a cost of $330.0 million. Net, it added nine company-operated stores and finished the quarter with 825.
Lululemon closed the quarter holding $1.4 billion in cash and cash equivalents. It could also draw on another $593.7 million through its committed revolving credit line. Inventories decreased 1% to $1.7 billion from a year earlier. Counted in units, they decreased 7%.
The company’s outlook
For the third quarter, lululemon said it expects net revenue of $2.290 billion to $2.320 billion, which would be a decline of 10% to 11%, and diluted earnings per share of $0.93 to $0.98. For all of 2026 it now expects net revenue of $10.350 billion to $10.500 billion, a decline of 5% to 7%, and diluted earnings per share of $9.48 to $9.73. Both assume a tax rate of about 30%.
The full-year figure includes the $0.86 per share from tariff refunds but allows for no further refunds and no future share repurchases. Management also said its guidance does not take in future unknown effects, tariffs and macroeconomic trends among them.
“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” said Meghan Frank, interim co-CEO and chief financial officer. She said the teams are focused on strengthening the product range, raising marketing investment and holding expenses in check.
André Maestrini, the other interim co-CEO, said the company looked forward to welcoming incoming CEO Heidi O’Neill the following week “as we begin an exciting new chapter.”
Sources
- lululemon athletica inc. Announces Second Quarter Fiscal 2026 Results – The Globe and Mail
- Lululemon Is Down 49% From Its All-Time High. Should You Buy Before Sept. 3? | The Motley Fool
- Lululemon Stock Gaps Down 20% Premarket on a Grim Forecast (Barchart via Yahoo Finance)
