revenue
2.29–2.32 $billion
Q3 2026
official guidance
LULULEMON ATHLETICA INC.
Last · NASDAQ$94.09-0.25 (-0.26%)close · yahoo · 11h ago
Market cap$10.90B105.6M sh
P/E · TTM7.7fwd 10.9 · eps 12.15
Beta0.92vs S&P 500
Div yield0.00%annual · TTM
52w range
$90.38$225.98
Volume2.5Msession
| Revenue | $11.1B |
|---|---|
| Operating income | $2.0B |
| Net income | $1.4B |
| Free cash flow | $1.4B |
| Operating margin | 17.8% |
| Net margin | 12.8% |
| Return on equity | 29.6% |
| Period | TTM 2026-08-02 |
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OpenFilings analyst
Our analyst
Agentic read of the latest earnings call — recommendation updates when we process a new transcript. Research synthesis, not investment advice.
Strong BuyBuyHoldSellStrong Sell
The call showed broad-based demand deterioration and materially lower earnings power without clear evidence that the turnaround is working.
Sell: lululemon's Q2 revenue fell 4% to $2.4 billion, comparable sales declined 10%, and leggings sales dropped approximately 20%, while North America fell 8% and China declined 2% in constant currency. The outlook deteriorated sharply, with Q3 revenue guided down 10%-11% and operating margin at approximately 6.5% versus 17% last year; full-year EPS is now $9.48-$9.73 versus $13.26 in 2025, including a one-time $0.86 tariff-refund benefit. The product and brand recovery plan could work, but management acknowledged inconsistent product launches, ongoing pressure in both largest markets, and no demonstrated top-line inflection yet.
Themes
- Brand Sentiment
- North America Decline
- China Mainland
- Leggings Shift
- Tariff Refunds
- Margin Deleverage
Near term
Q3 guidance embeds North America revenue declining in the mid-teens, with additional seasonal clearance and approximately 800 basis points of SG&A deleverage.
Marketing investment, fall activations, and faster reorders into Groove, Define, Scuba, and other stronger styles could create upside, but management explicitly excluded any improvement from guidance.
China remains volatile: pressure eased in June but intensified again in July, while the company expects only 3%-5% growth in Q3.
Longer term
The shift away from leggings toward away-from-body silhouettes is a structural assortment transition; new styles are encouraging but do not yet offset the approximately 20% leggings decline.
The 15% North American SKU-density reduction, store redesigns, localization, and faster chase capabilities could improve conversion and inventory productivity if product-market fit recovers.
The competitive moat is under pressure: analysts highlighted traffic weakness, negative conversion, inconsistent newness, and the risk that the current cost structure is unsuitable for sustained negative comps.
International expansion, particularly China, remains a long-term opportunity, but management is simultaneously reducing store openings to approximately 35 and shrinking pop-ups from 65 to approximately 40 by the end of 2026.
Red flags
Management attributed China weakness partly to negative media and social commentary, but provided no quantified evidence that planned activations are reversing the brand-sentiment damage.
Management said August started slowly and that overall product-launch response remains inconsistent; the Q3 outlook assumes deterioration in North America rather than recovery.
The cost base has not yet been fully resized. In response to analyst pushback, management said it is only now taking a deeper look at rightsizing expenses, with no quantified structural savings beyond current guidance.
Q2 EPS benefited by $0.86 from tariff refunds and associated interest, while the remaining approximately $105 million of potential refunds is excluded from guidance.
Higher markdowns, fixed-cost deleverage, distribution-center investment, and marketing spending are compressing profitability even as inventory units declined only 7% against a 10% comparable-sales decline.
Forward outlook
revenue growth
-11–-10 pct
Q3 2026
official guidance
gross margin
—
Q3 2026
official guidance
operating margin
6.5 pct
Q3 2026
official guidance
eps diluted
0.93–0.98 $per share
Q3 2026
official guidance
revenue
10.35–10.5 $billion
FY 2026
official guidance
revenue growth
-7–-5 pct
FY 2026
official guidance
eps diluted
9.48–9.73 $per share
FY 2026
official guidance
OpenFilings analyst view from primary-source filings and earnings calls — not investment advice.
From latest 10-K · 2026-03-17
- Americas Decline
- International Growth
- Tariff Pressure
- Margin Compression
- Supply Concentration
- Taiwan Sourcing Risk
- Share Repurchases
Red flags
- Americas comparable sales declined 3%, with lower traffic, conversion, and average order value; Americas product margin fell 340 basis points due primarily to tariffs and increased markdowns.
- Gross margin fell 260 basis points to 56.6% and operating margin fell 380 basis points to 19.9%; management expects tariffs and de minimis changes to continue adversely affecting gross margin and operating income in 2026.
- Supply concentration is material: the largest product vendor manufactured approximately 15% of products, while the largest fabric supplier produced approximately 20% of fabric used; the company has no long-term supplier or manufacturer contracts.
- Approximately 40% of products were manufactured in Vietnam and 34% of fabric originated from Taiwan, exposing the business to trade restrictions, geopolitical conflict, and supply disruption.
- Diluted EPS fell 9% to $13.26 and net income declined to $1.58 billion from $1.81 billion despite 5% revenue growth, indicating substantial earnings conversion pressure.
Earnings transcripts
Documents
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