Lululemon Shares Fall 17% After FY2026 Guidance Cut Despite Q2 Earnings Beat

Lululemon Athletica Inc. (NASDAQ:LULU) shares fell more than 17% in pre-market trading on Friday after the athletic apparel retailer lowered its fiscal 2026 guidance again, despite reporting second-quarter adjusted earnings above analyst expectations.

Adjusted earnings per share were $2.92, exceeding the analyst consensus of $1.82. The figure included $0.86 per share from tariff refunds and associated interest. Excluding that benefit, adjusted EPS would have been $2.06.

Revenue declined 4% year over year to $2.4 billion, below the $2.46 billion consensus estimate.

Comparable Sales Decline in Americas and International Markets

Comparable sales decreased 9% during the quarter, or 10% on a constant-currency basis. Comparable sales in the Americas declined 12%, while international comparable sales fell 3%.

Gross margin increased 200 basis points to 60.5%, including a 560-basis-point contribution from tariff refunds. Operating margin declined 190 basis points to 18.8%.

“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” said Meghan Frank, Interim Co-CEO and Chief Financial Officer. “Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management.”

Lululemon Issues Q3 Revenue and Earnings Forecast

For the third quarter of fiscal 2026, Lululemon expects revenue of between $2.29 billion and $2.32 billion, representing a year-over-year decline of 10% to 11%.

The midpoint of $2.305 billion compares with the analyst consensus estimate of $2.53 billion.

Third-quarter earnings per share are forecast at between $0.93 and $0.98, compared with the consensus estimate of $2.41.

FY2026 Revenue and EPS Guidance Lowered

For the full fiscal year, Lululemon now forecasts revenue of between $10.35 billion and $10.5 billion, representing a decline of 5% to 7%. The midpoint of $10.425 billion compares with the analyst consensus of $11.03 billion.

The company had previously expected annual revenue to be approximately flat or decline by as much as 1%.

Full-year earnings per share are now expected to range from $9.48 to $9.73, down from the previous forecast of $10.95 to $11.15 and below the analyst estimate of $10.84.

“We are disappointed to see another sharp downwards revision in revenue and EPS,” Stifel analysts said. “Questions on trend softness in the core North America market are not yet answered, and a surprise reversal of China Mainland trends – previously the strongest regional revenue contributor – further impact the consolidated outlook.”

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