Lululemon Athletica 2026 Q1 Earnings Revenue Grows by 7.3%, Net Income Declines 2.1%

Lululemon Athletica (LULU) reported its fiscal 2026 Q1 earnings on June 5th, 2025. The company saw a revenue increase of 7.3% to $2.37 billion, surpassing expectations of $2.35 billion. However, net income fell by 2.1% compared to the previous year, which was below analyst forecasts. Despite this, Lululemon reaffirmed its guidance for the year, projecting revenue growth between 5% and 7%. The company remains committed to its long-term growth strategy, focusing on innovation and brand expansion to overcome current market challenges.

Revenue
Lululemon Athletica's revenue for 2026 Q1 increased by 7.3% to reach $2.37 billion, a notable rise from $2.21 billion in the same quarter of 2025. The company-operated stores contributed significantly with $1.15 billion, while the e-commerce segment added $960.89 million. Other channels accounted for $256.66 million, culminating in the total revenue of $2.37 billion.

Earnings/Net Income
Lululemon Athletica's earnings per share (EPS) rose by 2.4%, reaching $2.61 in 2026 Q1 compared to $2.55 in 2025 Q1, showcasing continued growth. Despite this, net income experienced a decline, falling to $314.57 million from $321.42 million in the same period last year. The EPS growth suggests resilience in earnings performance.

Price Action
The stock price of Lululemon Athletica edged down 1.29% during the latest trading day. Despite this decline, the stock has risen 4.32% over the past week and surged 18.75% month-to-date, indicating strong investor confidence and momentum.

Post-Earnings Price Action Review
The strategy of buying LULU shares after a revenue miss and holding them for 30 days resulted in a 14.50% return, which significantly underperformed the benchmark, leading to a 63.75% excess loss. The Sharpe ratio stood at a mere 0.07, highlighting poor risk-adjusted returns. This approach shows limited effectiveness, as the returns did not compensate for the volatility and risks involved. Investors considering this strategy should be cautious and weigh potential risks against the expected returns. The market reaction suggests that buying after a revenue miss may not consistently yield favorable outcomes, especially amid fluctuating market conditions and competitive pressures.

CEO Commentary
Calvin R. McDonald, CEO & Director, expressed satisfaction with Lululemon's Q1 performance, noting that revenue growth met guidance expectations. He highlighted a 2% revenue increase in the U.S., indicating improved consumer sentiment despite cautious buying behavior. McDonald emphasized the company's commitment to leveraging its financial strength and brand affinity to navigate current market challenges and invest in long-term growth. He remarked on the positive reception of new product launches and the ongoing share repurchase program, reflecting confidence in the brand's trajectory. Overall, his tone was optimistic regarding the company's positioning and future opportunities.

Guidance
For the full year 2025, Lululemon continues to expect revenue between $11.15 billion and $11.3 billion, representing growth of 5% to 7%. Gross margin is projected to decrease by approximately 110 basis points, primarily due to increased tariffs, while diluted EPS is anticipated in the range of $14.58 to $14.78. Capital expenditures are expected to be around $740 million to $760 million, focusing on business growth investments and new store openings. For Q2, revenue guidance is set between $2.535 billion and $2.56 billion, with expectations for 14 new store openings.

Additional News
Lululemon Athletica has been active in strategic initiatives beyond earnings. Recently, the company announced a significant share repurchase program, demonstrating confidence in its stock value and commitment to returning value to shareholders. Furthermore, Lululemon has expanded its leadership team with the appointment of a new Chief Marketing Officer, aiming to drive enhanced brand visibility and consumer engagement. The company is also advancing its sustainability efforts, launching a new line of eco-friendly products to align with growing consumer demand for sustainable options. These moves reflect Lululemon's focus on strengthening its market position and fostering long-term growth amidst evolving consumer preferences and competitive dynamics.