Lululemon Athletica (LULU) Q2 2027 earnings summary

Executive summary

• Q2 2026 revenue declined 4% year-over-year to $2.4 billion, with North America/Americas down 8% and China mainland/international up 4%, but below plan.

• Diluted EPS was $2.92, down from $3.10 last year, including $0.86 per share from $134.5 million in IEEPA tariff refunds and interest.

• Comparable sales fell 9–10% year-over-year, with North America/Americas comp sales down 12% and China mainland comp sales down 8%.

• Management is executing an action plan focused on product innovation, marketing, operational efficiency, and agility amid challenging conditions.

• Guidance for the full year was lowered, reflecting ongoing macroeconomic, competitive, and brand sentiment headwinds.

Financial highlights

• Gross profit was $1.46–$1.5 billion (60.5% of revenue), up 200 bps YoY, aided by $134.5 million in tariff refunds.

• Operating margin was 18.8%, down 190–200 bps YoY, despite a 560 bps benefit from tariff refunds.

• SG&A expenses rose to 41.7% of revenue, up 400 bps YoY, due to fixed cost deleverage and increased marketing.

• Net income was $329.2 million, down 11% YoY.

• Inventory ended at $1.7 billion, down 1% in dollars and 7% in units YoY; cash and cash equivalents were $1.4 billion.

Outlook and guidance

• Q3 2026 revenue expected at $2.29–$2.32 billion, down 10–11% YoY; gross margin to decrease 250 bps; EPS $0.93–$0.98.

• Full-year 2026 revenue guided to $10.35–$10.5 billion, down 5–7% YoY; EPS $9.48–$9.73, including $0.86 per share from tariff refunds.

• North America/Americas revenue expected to decline low double digits; China mainland/international to grow high single digits.

• Gross margin for the year to decrease 80 bps; SG&A to increase 450 bps; operating margin to decrease 530 bps.

• Capex for the year expected at $680–$700 million.