WS Investor
04 Sep 2026, 09:09
Lululemon Stock Plunges 18% Premarket After Sales Decline and 2026 Outlook Cut
Lululemon Athletica (NASDAQ: LULU) shares plunged about 18% in premarket trading Friday after the athletic apparel company reported declining second-quarter sales and comparable-store performance while cutting its full-year outlook.
Second-quarter revenue fell 4% year over year to $2.4 billion, or 5% on a constant-currency basis. Comparable sales dropped 9%, with weakness particularly pronounced in the Americas, where revenue declined 8% and comparable sales fell 12%.
International revenue provided some offset, increasing 4%, although international comparable sales declined 3%.
Earnings Benefited Heavily From Tariff Refunds
Diluted EPS fell to $2.92 from $3.10 a year earlier, despite receiving a substantial boost from tariff refunds. Lululemon recognized $134.5 million in tariff refunds plus associated interest, adding $0.86 per share to quarterly earnings.
The refunds also boosted gross margin by 560 basis points. Including this benefit, gross margin increased 200 basis points to 60.5%. Operating income nevertheless declined 13% to $453.7 million.
This suggests underlying profitability was considerably weaker than the headline figures indicate.
Weak Guidance Drives LULU Selloff
The biggest concern for investors is the deteriorating sales outlook. Lululemon expects third-quarter revenue to decline 10% to 11% to between $2.29 billion and $2.32 billion.
For fiscal 2026, management now expects revenue of $10.35 billion to $10.50 billion, representing a 5% to 7% decline. Full-year EPS is projected at $9.48 to $9.73, including the $0.86 benefit already received from tariff refunds.
The 18% premarket selloff reflects growing concerns about weakening demand, particularly in Lululemon's core Americas market. While international expansion and the company's $1.4 billion cash position provide support, sharply falling comparable sales and another double-digit revenue decline expected in Q3 suggest the athletic-wear company faces a difficult turnaround.
Incoming CEO Heidi O'Neill will take over next week as Lululemon seeks to strengthen its product lineup, increase marketing investment and restore growth.
Lululemon Athletica (NASDAQ: LULU) shares plunged about 18% in premarket trading Friday after the athletic apparel company reported declining second-quarter sales and comparable-store performance while cutting its full-year outlook.
Second-quarter revenue fell 4% year over year to $2.4 billion, or 5% on a constant-currency basis. Comparable sales dropped 9%, with weakness particularly pronounced in the Americas, where revenue declined 8% and comparable sales fell 12%.
International revenue provided some offset, increasing 4%, although international comparable sales declined 3%.
Earnings Benefited Heavily From Tariff Refunds
Diluted EPS fell to $2.92 from $3.10 a year earlier, despite receiving a substantial boost from tariff refunds. Lululemon recognized $134.5 million in tariff refunds plus associated interest, adding $0.86 per share to quarterly earnings.
The refunds also boosted gross margin by 560 basis points. Including this benefit, gross margin increased 200 basis points to 60.5%. Operating income nevertheless declined 13% to $453.7 million.
This suggests underlying profitability was considerably weaker than the headline figures indicate.
Weak Guidance Drives LULU Selloff
The biggest concern for investors is the deteriorating sales outlook. Lululemon expects third-quarter revenue to decline 10% to 11% to between $2.29 billion and $2.32 billion.
For fiscal 2026, management now expects revenue of $10.35 billion to $10.50 billion, representing a 5% to 7% decline. Full-year EPS is projected at $9.48 to $9.73, including the $0.86 benefit already received from tariff refunds.
The 18% premarket selloff reflects growing concerns about weakening demand, particularly in Lululemon's core Americas market. While international expansion and the company's $1.4 billion cash position provide support, sharply falling comparable sales and another double-digit revenue decline expected in Q3 suggest the athletic-wear company faces a difficult turnaround.
Incoming CEO Heidi O'Neill will take over next week as Lululemon seeks to strengthen its product lineup, increase marketing investment and restore growth.
