Lululemon cuts guidance as Q2 sales drop 4%

On 18 September 2026, reports showed Lululemon Athletica faced ongoing demand pressures in its second quarter, leading management to lower its full-year guidance. Revenue fell 4% year over year to $2.4 billion, while comparable sales dropped 9%, or 10% on a constant-dollar basis. Operating income declined 13% to $453.7 million, bringing the operating margin down to 18.8%.

Reported profitability received a boost from $134.5 million in IEEPA tariff refunds alongside $4.1 million in associated interest, lifting diluted earnings per share by $0.86. Gross margin rose 200 basis points to 60.5% due to the refunds. Excluding that relief, underlying margins were hit by tariffs, markdowns and fixed-cost deleverage.

The Americas remained the weakest segment, with revenue declining 8% and comparable sales sliding 12%. United States revenue dropped 8% and Canada fell 11%. In Mainland China, revenue rose 4% on a reported basis but declined 2% in constant currency, affected by negative social media commentary. Rest of World revenue grew 5%, or 6% in constant currency. Product trends shifted as leggings sales dropped about 20%, though newer loose-fitting styles gained traction.

For fiscal 2026, Lululemon now projects revenue of $10.35 billion to $10.50 billion, down 5% to 7%, with earnings per share between $9.48 and $9.73. Third-quarter revenue is expected to drop 10% to 11% to between $2.29 billion and $2.32 billion, with earnings per share falling to 93 cents to 98 cents from $2.59 a year earlier. Full-year gross margin is projected to contract by around 80 basis points.