Lululemon Reports Q2 Fiscal 2026 Revenue Decline to $2.42 Billion

Lululemon Athletica Inc. reported its financial results for the second quarter of fiscal 2026, revealing a net revenue of $2.42 billion, a decrease of 4% from $2.53 billion in the same quarter of the previous year. The decline in revenue was attributed primarily to a 12% drop in comparable sales in the Americas, which accounted for a significant portion of the company's revenue. In contrast, the company saw a 4% increase in net revenue from its China Mainland segment and a 5% increase from the Rest of World segment. Gross profit for the quarter was $1.46 billion, down 1% year-over-year, while gross margin improved to 60.5%, reflecting a 200 basis point increase due to $134.5 million in tariff refunds received under the International Emergency Economic Powers Act (IEEPA).

The company's income from operations fell by 13% to $453.7 million, with an operating margin of 18.8%, down from 20.7% in the prior year. Selling, general, and administrative expenses increased by 5.7% to $1.01 billion, driven by higher head office costs and increased marketing expenses. Net income for the quarter was $329.2 million, a decrease of 11.2% from $370.9 million in the same quarter last year, resulting in diluted earnings per share of $2.92, compared to $3.10 in the prior year.

In terms of operational developments, Lululemon expanded its footprint, opening 15 new stores in China Mainland and 10 in the Rest of World segment since the second quarter of 2025, bringing the total number of company-operated stores to 825 as of August 2, 2026. The company continues to focus on enhancing its e-commerce capabilities, which partially offset declines in physical store traffic. The Americas segment experienced a notable decrease in customer traffic and conversion rates, prompting the company to implement a strategic plan aimed at driving revenue growth through improved product creation and activation.

Looking ahead, Lululemon anticipates ongoing challenges due to shifting consumer demand, macroeconomic conditions, and geopolitical factors that may impact its business. The company has initiated a plan to increase reliance on full-price selling to drive sustainable revenue growth. Despite the current challenges, Lululemon remains optimistic about its long-term growth potential, supported by its strong brand presence and strategic initiatives aimed at enhancing customer engagement and expanding its market share. The company expects to leverage its cash reserves and available credit facilities to navigate the evolving market landscape effectively.