Key Takeaways:
- Revenue of $2.50B beat estimates but Americas comparable sales fell 5%.
- Full-year revenue guidance cut to $11.00B-$11.15B from $11.35B-$11.50B.
- Gross margin contracted 410 basis points as tariffs and inventory weighed.
Back
Lululemon cuts FY2026 outlook by $350M as Americas sales slide
Lululemon reported Q1 revenue of $2.50B, beating estimates, but slashed its full-year outlook as Americas sales declined.
"The results reflect ongoing macroeconomic headwinds in our largest market," interim co-CEO Meghan Frank said in the earnings release.
Shares fell as much as 7% in after-hours trading. The guidance cut signals management sees no quick recovery in North America, where comparable sales declined 5% in the quarter.
Gross margin contracted 410 basis points to 54.2% from 58.3% a year earlier, as the company absorbed tariff-related costs and managed an 18% inventory buildup. Operating income dropped 37% to $276.9 million.
International revenue grew 22%, with China comparable sales rising 30% in the prior quarter. But the strength overseas was not enough to offset a 3% decline in Americas revenue.
The company now expects full-year EPS of $10.95 to $11.15, down from the prior $12.10 to $12.30 range and well below the $12.29 consensus. The outlook excludes roughly $210 million in operating income headwinds from tariffs, which management has not yet fully offset.
The guidance reduction puts Lululemon on track for its first annual earnings decline since 2020. Investors will watch the September CEO transition to Heidi O'Neill for signs of a strategic reset in North America.
This article is for informational purposes only and does not constitute investment advice.
© 2026 Edgen Powered by