For the quarter ended August 2, 2026, net revenue decreased 4 per cent year on year (YoY) to $2.42 billion, while net income totalled $329 million, down from $371 million a year earlier. Diluted earnings per share (EPS) were $2.92, compared to $3.10 in the prior-year period.
Income from operations declined 13 per cent to $454 million, with operating margin at 18.8 per cent. Comparable sales fell 9 per cent YoY, including a 12 per cent drop in the Americas and a 3 per cent decrease internationally.
Lululemon’s Q2 FY26 revenue fell 4 per cent YoY to $2.42 billion, but gross margin rose to 60.5 per cent as tariff refunds supported profit.
Americas softness led the decline, with revenue down 8 per cent and comparable sales down 12 per cent; international revenue grew 4 per cent.
FY26 guidance was cut to $10.35-$10.50 billion, a 5-7 per cent fall, with Q3 sales expected to drop 10-11 per cent.
“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook. Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management. Looking ahead, we have confidence in the strength of the lululemon brand, the deep connection we have with our guests and ambassadors, and the significant opportunities we see to drive long-term growth,” said Meghan Frank, interim co-CEO and chief financial officer, lululemon athletica inc.
“We remain confident in our ability to take the right steps to strengthen our performance and deliver sustainable growth over time. I would like to thank our teams around the world for their focused efforts and continued commitment to lululemon. We look forward to welcoming our incoming CEO, Heidi O’Neill, next week as we begin an exciting new chapter for the company,” said André Maestrini, interim co-CEO, president, and chief commercial officer, lululemon athletica inc.
International growth offsets Americas softness
Regional performance was mixed.
Net revenue in the Americas declined 8 per cent YoY, while international net revenue increased 4 per cent, or 2 per cent on a constant dollar basis.
Within international, China (excluding Hong Kong and Macau) revenue rose 4 per cent, though this was offset by currency headwinds.
Comparable sales in the Americas dropped 12 per cent, while international comparable sales fell 3 per cent.
Margins benefit from tariff refunds
Gross profit decreased 1 per cent YoY to $1.46 billion, but gross margin expanded by 200 basis points to 60.5 per cent, supported by $134.5 million in International Emergency Economic Powers Act (IEEPA) tariff refunds, which contributed 560 basis points to margin improvement.
Operating margin declined 190 basis points to 18.8 per cent, also reflecting the impact of the tariff refunds.
The company ended the quarter with $1.39 billion in cash and cash equivalents and inventories of $1.71 billion, down 1 per cent YoY. lululemon opened nine net new stores during the quarter, bringing its total to 825 company-operated locations.
Outlook lowered for FY26
For the third quarter of FY26, lululemon expects net revenue between $2.29 billion and $2.32 billion, representing a 10-11 per cent decline YoY, and diluted EPS in the range of $0.93 to $0.98.
For the full fiscal year, the company now forecasts net revenue between $10.35 billion and $10.50 billion, a 5-7 per cent decrease from the prior year, and diluted EPS of $9.48 to $9.73.
The outlook includes the $0.86 per share benefit from Q2 tariff refunds but excludes any future tariff recoveries.
The company said it remains committed to strengthening product innovation, expanding its global presence and maintaining disciplined cost management to support long-term growth.
Fibre2Fashion News Desk (MS)
