lululemon Reports Second-Quarter Fiscal 2026 Results as Revenue Declines Amid Challenging Market Conditions
lululemon athletica inc. has announced its financial results for the second quarter of fiscal 2026, reflecting a period of continued pressure on sales and comparable-store performance as the global athletic apparel retailer works to strengthen its business and position the brand for sustainable long-term growth.
The company’s second quarter ended August 2, 2026, with net revenue reaching approximately $2.4 billion, representing a 4% decline compared with the same period in fiscal 2025. On a constant-dollar basis, net revenue declined 5%. The results highlight the challenging operating environment facing the company, particularly across the Americas, while international markets continued to provide a degree of resilience.
Despite the decline in revenue and comparable sales, lululemon continued to focus on strengthening its brand, product portfolio, marketing strategy and global store network. Management said the company is taking a prudent approach to its revised full-year outlook while continuing to invest in areas expected to support future growth.
Meghan Frank, Interim Co-CEO and Chief Financial Officer, said the company continues to navigate challenging market dynamics while maintaining a disciplined approach to its business. She emphasized that lululemon’s teams are focused on accelerating growth through stronger product offerings, increased marketing investments and disciplined expense management.
Frank also pointed to the company’s confidence in the strength of the lululemon brand and its relationships with customers and ambassadors. According to management, those connections, combined with opportunities across the company’s markets, provide a foundation for pursuing long-term growth despite current pressures.
André Maestrini, Interim Co-CEO, President and Chief Commercial Officer, similarly expressed confidence in lululemon’s ability to take the necessary steps to improve performance and deliver sustainable growth over time. He thanked employees across the company for their continued commitment and highlighted the upcoming leadership transition as an important moment for the business.
Maestrini also welcomed incoming CEO Heidi O’Neill, who is scheduled to join the company the following week. Her arrival is expected to mark a new chapter for lululemon as the company works to strengthen its performance and build on the brand’s global presence.
Second-Quarter Revenue Performance
During the second quarter of fiscal 2026, lululemon generated net revenue of approximately $2.4 billion, down 4% from the prior-year period. On a constant-dollar basis, revenue declined 5%.
Performance varied significantly by geography. Revenue in the Americas declined 8%, reflecting continued pressure in the company’s largest market. International net revenue, however, increased 4% compared with the second quarter of fiscal 2025, or 2% on a constant-dollar basis.
The contrast between the Americas and international operations demonstrates the importance of lululemon’s continued international expansion. While the company faced challenges in its core Americas market, international markets delivered comparatively stronger revenue performance.
Comparable sales declined 9% during the quarter, or 10% on a constant-dollar basis. In the Americas, comparable sales decreased 12%. International comparable sales declined 3%, or 6% on a constant-dollar basis.
The comparable-sales performance indicates that the company experienced weaker demand across its existing store and digital channels compared with the prior-year period. Management is responding by emphasizing product innovation, marketing and other initiatives intended to strengthen customer engagement and restore momentum.
Gross Profit and Margin Performance
lululemon reported gross profit of approximately $1.5 billion for the second quarter, representing a 1% decline from the previous year.
At the same time, gross margin increased by 200 basis points to 60.5%. A significant factor behind the higher gross margin was the recognition of $134.5 million in tariff refunds received by the company during the quarter.
The tariff refunds were related to tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. lululemon said the $134.5 million refund was recognized as a reduction in cost of goods sold. The company also recognized $4.1 million of associated interest as an increase to other income.
Together, these amounts had a meaningful impact on the company’s reported profitability. The tariff refunds increased gross margin by approximately 560 basis points and also increased operating margin by approximately 560 basis points.
Without considering the benefit associated with the tariff refunds, the underlying profitability picture would therefore have been considerably different from the reported margin figures.
Operating Income and Earnings
Income from operations declined 13% to $453.7 million in the second quarter of fiscal 2026. Operating margin was 18.8%, down 190 basis points compared with the second quarter of fiscal 2025.
The tariff refunds provided a significant benefit to operating results, increasing operating margin by approximately 560 basis points. This benefit helped offset some of the pressures affecting the company’s operating performance during the quarter.
lululemon reported an effective income tax rate of 29.6% for the second quarter, compared with 30.5% during the same period in fiscal 2025.
Diluted earnings per share were $2.92, compared with $3.10 in the second quarter of fiscal 2025. The company said the reported earnings per share figure included a $0.86-per-share benefit related to tariff refunds and associated interest, net of tax.
The earnings results demonstrate the impact of both the company’s operating challenges and the one-time financial benefit associated with tariff refunds.
Share Repurchase Activity
lululemon continued to return capital to shareholders during the quarter through its share repurchase program.
During the second quarter, the company repurchased approximately 2.7 million shares at a total cost of $330.0 million. Share repurchases can reduce the number of outstanding shares and potentially support earnings per share over time.
The continued repurchase activity also reflects lululemon’s financial capacity and its approach to capital allocation despite the more challenging sales environment.
Store Expansion Continues
Despite the decline in comparable sales, lululemon continued to expand its physical retail footprint.
The company opened nine net new company-operated stores during the second quarter of fiscal 2026. At the end of the quarter, lululemon operated a total of 825 company-operated stores.
The ongoing store expansion underscores the company’s commitment to maintaining a strong physical presence while also developing its digital and omnichannel capabilities. New stores can provide opportunities to reach additional customers, increase brand awareness and support growth in markets where lululemon sees long-term potential.
The company’s international revenue growth also suggests that its global expansion strategy remains an important component of its broader growth plans.
Balance Sheet Remains Strong
lululemon ended the second quarter with a solid liquidity position. The company reported $1.4 billion in cash and cash equivalents at the end of the period.
In addition, lululemon had approximately $593.7 million of available capacity under its committed revolving credit facility. The combination of cash and available borrowing capacity provides the company with financial flexibility as it navigates the current operating environment.
A strong balance sheet can give lululemon the ability to continue investing in its business, support store expansion, fund marketing and product initiatives, pursue strategic opportunities and maintain shareholder-return programs.
Inventory Levels Decline
Inventory management also remained an important area of focus during the quarter.
lululemon reported inventory of approximately $1.7 billion at the end of the second quarter, representing a 1% decline compared with the end of the second quarter of fiscal 2025. On a unit basis, inventories declined 7%.
The reduction in unit inventory suggests that the company continued to manage merchandise levels carefully amid the softer sales environment. Effective inventory management is particularly important for apparel retailers because it can help reduce the risk of excess merchandise and the need for significant promotional activity.
The company’s ability to reduce unit inventories while maintaining its broad product assortment will remain an important factor as it seeks to improve sales trends and protect profitability.
Focus on the Next Phase of Growth
lululemon’s second-quarter results come at an important point for the company as it works through weaker performance in the Americas while continuing to pursue international growth opportunities.
Management’s strategy centers on strengthening the company’s product offering, increasing marketing investments and maintaining disciplined expense management. These priorities are intended to help rebuild momentum while preserving the financial flexibility needed to invest for the future.
The company also continues to rely on the strength of its brand and its relationships with customers and ambassadors. These relationships have historically played an important role in lululemon’s positioning within the athletic apparel and lifestyle market.
The upcoming arrival of Heidi O’Neill as CEO represents another significant development for the organization. Management described the transition as the beginning of an exciting new chapter and indicated that the company remains focused on taking the necessary steps to improve performance and create sustainable growth.
About lululemon athletica inc.
lululemon athletica inc. (NASDAQ:LULU) is a technical athletic apparel, footwear, and accessories company for yoga, running, training, and most other activities, creating transformational products and experiences that build meaningful connections, unlocking greater possibility and wellbeing for all. Setting the bar in innovation of fabrics and functional designs, lululemon works with yogis and athletes in local communities around the world for continuous research and product feedback. For more information, visit lululemon.com.
