Lululemon Athletica 2026 Q2 Earnings Misses Expectations as Net Income Declines 5.6%

Lululemon Athletica reported its fiscal 2026 Q2 earnings on Sep 04th, 2025, revealing a mixed performance. Despite a modest revenue increase, the company experienced a decline in earnings. Lululemon slightly reduced its 2025 revenue guidance, citing softness in the U.S. market and challenges in managing product cycles.

Revenue
Lululemon Athletica's total revenue rose by 6.5% year-over-year to $2.53 billion in Q2 2026, compared to $2.37 billion in Q2 2025. Revenue across key segments was distributed as follows: company-operated stores generated $1.25 billion, e-commerce contributed $993.09 million, and other channels added $277.17 million. The e-commerce segment, in particular, demonstrated resilience amid evolving retail dynamics.

Earnings/Net Income
Earnings per share (EPS) dipped by 1.6% to $3.10 in 2026 Q2, down from $3.15 in the prior year. Net income also declined to $370.90 million, a 5.6% drop from $392.92 million in 2025 Q2. Despite the earnings decline, Lululemon maintained profitability for the 19th consecutive fiscal quarter, highlighting its long-term operational stability.

Price Action
The stock price of Lululemon Athletica rose 2.58% on the latest trading day, 0.25% over the past week, and 4.91% month-to-date as of the reporting period. However, the post-earnings reaction remained subdued due to concerns over U.S. market performance.

Post-Earnings Price Action Review
Following the earnings release, Lululemon's stock experienced modest gains in the short term, but investor sentiment remained cautious. The mixed earnings report, particularly the reduced revenue guidance and EPS decline, tempered enthusiasm, even as international growth and e-commerce resilience offered some optimism.

CEO Commentary
CEO Calvin McDonald acknowledged the company's strong international momentum, especially in China and the Rest of the World, but expressed dissatisfaction with U.S. performance. He cited weak consumer response to updated seasonal colors and overreliance on lounge and social products as key issues. McDonald emphasized a strategic shift, aiming to increase new styles from 23% to 35% of the product assortment and improve agility in addressing demand. He remained confident in the brand’s loyal customer base and the leadership team, stating, “When we deliver new innovation, they respond and are ready to purchase.”

Guidance
Lululemon revised its 2025 revenue guidance to $10.85–$11.00 billion, a modest 2–4% increase from $10.8 billion in 2024. The company now expects a 1–2% decline in U.S. revenue, while China is projected to grow 20–25% and the Rest of the World by 20%. For 2026, Lululemon anticipates benefits from product innovation, including a 35% newness target, and plans to manage gross margin impacts from tariffs and de minimis removal, which are expected to reduce operating margin by $320 million. Capital expenditures are forecasted at $700–$720 million for 2025.

Additional News
Over the three weeks following Lululemon’s earnings report, no significant M&A activity or C-level executive changes were disclosed. However, the company announced continued investment in its U.S. product strategy, focusing on reinvigorating core categories and enhancing customer engagement. Additionally, Lululemon updated its sustainability initiatives, committing to expand eco-friendly materials in its 2026 product lines. Another notable development was the company’s decision to increase marketing spend in international markets to capitalize on growth opportunities in China and the Rest of the World.