TLDR
- Lululemon posted Q1 revenue of $2.47bn, up 4%, beating estimates of $2.43bn, but EPS dropped to $1.69 from $2.60 a year ago
- Americas comparable sales fell 5%, while international comps rose 13%, with Mainland China up 30%
- Full-year revenue guidance cut to $11bn–$11.15bn, well below the $11.47bn consensus
- Q2 EPS guidance of $1.76–$1.81 came in far short of the $2.69 analyst estimate
- New CEO Heidi O’Neill doesn’t take over until September, leaving the turnaround on hold for now
Lululemon Athletica (LULU) stock was already down 40% year-to-date heading into its Q1 earnings report. It then dropped another 11% in after-hours trading Thursday after the company cut its full-year guidance despite meeting first-quarter revenue expectations.
Lululemon Athletica Inc., LULU
Q1 net revenue came in at $2.47bn, up 4% year-over-year and ahead of the $2.43bn consensus. But that’s where the good news mostly ended.
Net income fell sharply to $195m from $314.5m in Q1 of last year. Diluted EPS dropped to $1.69 from $2.60, just barely beating the $1.67 estimate. Operating income fell 37% to $276.9m, with operating margin narrowing 730 basis points to 11.2%.
$LULU Q1’26 EARNINGS HIGHLIGHTS
Revenue: $2.5B (Est. $2.5) ; +4% YoY
EPS: $1.69 (Est. $1.69)
Comparable Sales: +1%
Americas Revenue: -3% YoY
Gross Margin: 54.2%; -410 bps YoYFY Guide:
Revenue: $11.0B-$11.15B, down from prior $11.35B-$11.5B
EPS:… pic.twitter.com/EFkEwi21sj— Wall St Engine (@wallstengine) June 4, 2026
Gross margin fell 410 basis points to 54.2%. The company said 280 basis points of that was due to tariff impact, with the rest tied to fixed cost pressure from weaker North American sales.
The regional split told two different stories. Americas revenue fell 3%, with comparable sales down 5%. International revenue jumped 22%, driven by Mainland China, where revenue rose 30% and comps gained 20%.
Guidance Misses Badly
The guidance update was the real blow to investors. For Q2, Lululemon is guiding for revenue of $2.45bn–$2.47bn, a decline of 2%–3% from Q1 and well below the $2.59bn Wall Street was expecting. Q2 EPS guidance of $1.76–$1.81 compared to estimates of $2.69.
Full-year revenue guidance was cut to $11bn–$11.15bn, roughly flat to a slight decline, against the $11.47bn consensus. Full-year EPS was guided to $10.95–$11.15, versus estimates of $12.28. The company noted its guidance excludes any potential refunds from IEEPA tariffs.
The company repurchased 2.2 million shares for $358.3m during the quarter and ended the period operating 816 stores worldwide, a net increase of five.
Leadership Transition Still Months Away
The management picture remains unsettled. Former CEO Calvin McDonald was pushed out, and the company is currently led by interim co-CEOs until Heidi O’Neill, a former Nike executive, takes over in September.
Co-CEO Meghan Frank pointed to some wins with new product launches during the quarter but acknowledged there were misses too. She said the company would be “bolder” in the second half of the year.
O’Neill’s appointment didn’t spark a rally when it was announced, so she’ll have work to do to win over investors when she does arrive.
At current levels, LULU trades at a forward P/E of around 10 based on its lowered full-year forecast. The stock’s 52-week range is $116.63–$275.60, and it was last trading around $125.
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