Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
For the second quarter of fiscal 2026, lululemon's revenue declined and net income fell by double digits, while reported profitability was supported by a one-time $134.5 million IEEPA tariff refund. Management attributed the revenue decline primarily to softness in the Americas, where comparable sales decreased 12% as traffic, conversion, and average order value weakened. International markets continued to grow in reported terms, but the core Americas business dragged consolidated results and SG&A deleveraged by 400 basis points. The quarter's outcome also depends on ongoing tariff uncertainty and the impact of a CEO transition, which will continue to shape performance.
Revenue
$2.42B
-4.34% YoY
EPS (Diluted)
$2.92
-5.81% YoY
Gross Margin
60.5%
+2.0 pts YoY
Operating Income
$453.65M
-13.39% YoY
Source: SEC XBRL
lululemon athletica (LULU) reported Q2 FY2026 revenue of $2.42B, down 4.3% year over year. Operating margin was 18.8%, down 1.9 points from 20.7% a year earlier. LULU's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Last 4 quarters: 3 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 2.06 | 1.83 | Beat +12.5% |
| Jun 2026 | 1.69 | 1.72 | Miss -1.5% |
| Mar 2026 | 5.01 | 4.88 | Beat +2.8% |
| Dec 2025 | 2.59 | 2.30 | Beat +12.6% |
3 reported segments · SEC XBRL
Segment revenue totals $2.42B, which is the $2.42B of consolidated revenue on the income statement.
Profit above is reported as operating income, the measure LULU itself discloses in this filing. Each company chooses its own measure here, so these margins are not comparable with another company's.
Compiled by AI from 10-Q Item 2 of this filing
The second quarter included $134.5 million of IEEPA tariff refunds and $4.1 million of associated interest, recognized in cost of goods sold and other income, respectively. Management attributed a 560-basis-point benefit to these refunds within a total 200-basis-point gross margin increase.
Source: 10-Q Item 2 MD&A
Americas comparable sales decreased 12% in the quarter, driven by reduced traffic, lower conversion rates, and a decrease in average order value. Management said it has initiated an action plan focused on product creation, product activation, and enterprise enablement to drive Americas revenue growth.
Source: 10-Q Item 2 MD&A
SG&A expenses rose 5.7% to $1.0 billion and increased to 41.7% of net revenue from 37.7%, driven by higher head office costs, including $13.4 million of proxy contest costs, and higher operating channel costs.
Source: 10-Q Item 2 MD&A
China Mainland net revenue increased 4% in reported terms but decreased 2% on a constant-dollar basis, while Rest of World net revenue increased 5% reported and 6% on a constant-dollar basis. Comparable sales decreased 2% in China Mainland and 4% in Rest of World.
Source: 10-Q Item 2 MD&A
lululemon paid $230 million of tariffs under IEEPA and has submitted refund claims, but as of August 2, 2026 it had not recognized an asset for further potential refunds. The U.S. Supreme Court invalidated IEEPA tariffs, and new tariffs under alternative legal powers continue to create uncertainty.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 1A of this filing · 3 high, 2 medium, 0 low
Changes to U.S. tariff and customs policy, including removal of the de minimis exemption, have materially increased product costs and may continue to compress margins. lululemon paid $230 million of IEEPA tariffs and received $134.5 million in refunds during Q2 FY2026, but additional refunds and the scope of new tariffs remain uncertain.
Source: 10-Q Item 1A Risk Factors
Former CEO stepped down effective January 31, 2026; Heidi O'Neill is expected to become CEO September 8, 2026. The transition and other senior-level changes may create uncertainty, divert management attention, and disrupt operations, employee engagement, and retention.
Source: 10-Q Item 1A Risk Factors
The filing highlights reduced traffic, lower conversion, and declining average order value in the Americas, along with shifting brand sentiment and consumer activism. Management sees these conditions as continuing to impact the business, particularly in its largest segment.
Source: 10-Q Item 1A Risk Factors
Rapid adoption of AI-enabled shopping tools may reduce lululemon's control over consumer decision-making and weaken brand loyalty, while shifts between physical and digital channels could pressure margins. The company must integrate digital and physical operations to avoid store impairment and channel margin erosion.
Source: 10-Q Item 1A Risk Factors
Growth depends on expansion outside the Americas, where lululemon has limited operating experience and brand recognition. China Mainland and Rest of World have grown in reported terms, but comparable sales declined in Q2 FY2026, and failure to penetrate new markets could hurt long-term growth.
Source: 10-Q Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 2.42 $B | 2.53 $B | -4.34% |
Cost of Revenue $B | 0.95 $B | 1.05 $B | -8.99% |
Gross Profit $B | 1.46 $B | 1.48 $B | -1.04% |
Operating Income $M | 453.65 $M | 523.81 $M | -13.39% |
Net Income $M | 329.22 $M | 370.91 $M | -11.24% |
EPS (Basic) $ | 2.92 $ | 3.10 $ | -5.81% |
EPS (Diluted) $ | 2.92 $ | 3.10 $ | -5.81% |
SG&A Expense $B | 1.01 $B | 0.95 $B | +5.75% |
Answers draw on this SEC filing and the data on this page
Lululemon delivered 4.3% revenue growth to $2.5B in Q1 FY2026, led by China Mainland and Rest of World, but higher tariffs, markdowns, and operating expenses drove a 38.0% decline in net income to $195.0M and compressed operating margin to 11.2%. Source: 10-Q Item 2 MD&A, pp.18-23.
lululemon athletica's FY2025 10-K reveals revenue grew 4.9% to $11.1B, but profitability deteriorated sharply as gross margin contracted 260bps to 56.6% and net income fell 13.0% to $1.58B amid rising costs and elevated SG&A spending.
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