Lululemon Athletica (33L) Q2 2026 Earnings Report

The call was dominated by significant operating challenges, including declining Q2 revenue and comparable sales, brand and traffic pressure, inconsistent product performance, weakness in leggings and accessories, and sharply reduced Q3 and full-year earnings guidance. Management highlighted strong liquidity, successful community engagement, selected product and regional strengths, cost actions and continued investment in the brand, but these positives did not outweigh the breadth and magnitude of the reported declines.

For Q3, lululemon expects revenue in the range of $2.29 billion to $2.32 billion, representing a decline of 10% to 11%, with approximately 17 net new company-operated stores, 15 optimizations, North America to decline in the mid-teens, the U.S. also in that range, Canada lower, and China Mainland and Rest of World to increase 3% to 5%; gross margin is expected to decrease approximately 250 basis points, markdowns to increase approximately 60 basis points, SG&A rate to deleverage by 800 basis points, operating margin to be approximately 6.5%, EPS to be in the range of $0.93 to $0.98, effective tax rate approximately 30%, and inventory dollar growth in the low single-digit range with units down slightly. For fiscal year 2026, the company expects revenue in the range of $10.35 billion to $10.5 billion, down 5% to 7% relative to 2025, North America down in the low double digits, the U.S. also in that range, Canada slightly lower, China Mainland up in the high single digits, and Rest of World up in the mid-single digits; approximately 35 net new company-operated stores, approximately 35 optimizations, square footage growth of approximately 10%, gross margin down approximately 80 basis points, markdowns up 40 basis points, tariffs at a rate of 10% to 12.5% through September and 20% for the remainder of the year, SG&A up approximately 450 basis points, operating margin down approximately 530 basis points, effective tax rate approximately 30%, diluted EPS in the range of $9.48 to $9.73, inventory dollar growth up in the mid-single-digit range with units approximately flat, repurchase levels in 2026 in line with 2025, and capital expenditures approximately $680 million to $700 million.