Lululemon Athletica cut its full-year revenue outlook to $10.35 billion to $10.5 billion—down 5% to 7%—after reporting that second-quarter revenue fell 4% to $2.4 billion, marking another significant guidance reduction for the struggling athleisure retailer.
Comparable sales declined 9% in the quarter, or 10% on a constant-currency basis, with the Americas segment hit particularly hard by a 12% comparable-sales drop and 8% revenue decline. The company’s interim co-CEOs, Meghan Frank and André Maestrini, acknowledged the challenging environment while pledging to strengthen product offerings and marketing investments.
The revised full-year outlook represents a sharp retreat from guidance issued just three months earlier. In June, Lululemon had projected fiscal 2026 revenue of $11.0 billion to $11.15 billion and earnings per share of $10.95 to $11.15. The new guidance—now $9.48 to $9.73 in diluted EPS—signals deepening headwinds in a retail sector under pressure from weak consumer demand and geopolitical uncertainty.
Lululemon’s struggles mirror broader challenges facing the athletic apparel industry. Earlier this month, Dick’s Sporting Goods missed Q2 earnings expectations and cut its full-year outlook, citing softening consumer spending. The pattern reflects how major retailers are contending with shifting demand and cost pressures that even premium-priced brands cannot fully offset.
For the third quarter of 2026, Lululemon expects revenue to decline 10% to 11%, to a range of $2.29 billion to $2.32 billion. The company’s international segment showed relative resilience, with net revenue up 4% (or 2% on a constant-dollar basis) and comparable sales down only 3%, suggesting North America remains the primary source of weakness.
One bright spot was a $134.5 million tariff refund received in the quarter, which boosted Q2 diluted earnings per share by $0.86. However, the company cautioned that its full-year outlook does not assume any further tariff refunds, signaling uncertainty about potential policy changes ahead. Gross margin improved 200 basis points to 60.5%, though operating margin fell 190 basis points to 18.8% when excluding the tariff benefit.
Lululemon’s Q1 earnings announcement in June had already triggered a sharp selloff after the company first signaled weakness in its core North American market, citing product quality concerns and brand perception challenges. This second consecutive guidance cut underscores mounting investor concern about the company’s near-term recovery prospects and whether management can stabilize sales before the critical holiday season.
Sources
- Lululemon Corporate Newsroom — Q2 2026 earnings announcement with revenue, comparable sales, guidance, and tariff refund details
- Yahoo Finance — Full-year revenue outlook range of $10.35 billion to $10.5 billion and stock market reaction
- Investing.com — Q3 2026 guidance of 10% to 11% revenue decline and stock price movement
- UBS Securities — Pre-earnings analyst expectations for earnings-per-share guidance cut of approximately $1.25
