LULU

A stock does not lose half its value in 10 months because of one bad quarter. Lululemon Athletica (NASDAQ: LULU) has fallen 54% in 2026 and now trades for about 8.5 times trailing earnings, a multiple the market usually reserves for businesses it believes are shrinking for good. Not long ago, this was a company that could charge $128 for leggings and sell them out quickly. It used to be the staple of athleisure clothing, but now it seems like somewhat of an afterthought. Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » So the real question is whether the market has correctly repriced a brand that lost its edge, or overshot on a company that is still one of the most profitable names in apparel. The decline has three layers, and they stack. The first is the consumer. Lululemon's Americas business -- roughly two-thirds of revenue -- posted comparable sales down 12% in the quarter ended Aug. 2, and the company now expects full-year revenue to fall 5% to 7%, with the third quarter guided even worse. For a brand that grew 30% a year not long ago, a shrinking top line is a new experience. Shoppers who used to pay full price for a new color are waiting for markdowns or buying from the newer, cheaper brands that copied Lululemon's playbook. The second layer is leadership. The company spent most of 2026 being run by two interim co-CEOs before Heidi O'Neill, a former Nike executive, took over on Sept. 8. Less than a month later, she reorganized the senior team. Two long-tenured executives are leaving, two new roles were filled from outside, and searches are still open for a chief brand officer and chief technology officer. This shows some uncertainty from the top, and markets typically price in uncertainty before they price results. The third layer is the valuation math itself. That 8.2 multiple rests on trailing earnings of $12.20 per share, which include $0.86 in one-time tariff refunds and a strong back half of last year. Management's guidance for this year is $9.48 to $9.73 per share, which puts the stock closer to 10 times earnings. That's still cheap, but not as cheap as the headline suggests. This does not look like a broken company. Even in a quarter where sales fell, Lululemon earned an 18.8% operating margin, ended with $1.4 billion in cash, and repurchased 2.7 million shares for $330 million. The company is deliberately shrinking its share count. Companies in real trouble rarely have the cash to shrink their share count while revenue declines. International revenue also grew 4%, and the company opened nine net new stores to reach 825. In my opinion, the more interesting signal is the Oct. 7 restructuring. O'Neill said the plan "starts with putting product, design, and innovation at the center of how we operate." She hired Maggie Gauger, who ran Athleta for The Gap and previously led Nike's North America women's business, into a new president and chief product officer role that pulls design, merchandising, footwear, and materials science under one person, per Quartz. Joseph Godsey, from Walmart Canada and before that Adidas, became chief operating officer to speed the path from design to shelf. My opinion is that the brand is fine, and that the product pipeline got stale. If that is right, it is fixable, and apparel product cycles run 12 to 18 months. That diagnosis could be wrong, though. If customers left because the brand stopped feeling special rather than because the product got stale, a new org chart won't win them back quickly, and it definitely doesn't change customer habits. Selling expenses have also climbed from 37.7% to 41.7% of revenue. Lululemon is spending more on marketing while sales shrink, and that squeeze will get worse before the new team's work shows up in stores. Nike's own slow recovery is a reminder that apparel turnarounds take time. So is Wall Street wrong? Partly, but at the same time, not really. The stock fell for real reasons, and the next two quarters will probably look ugly. But the current price assumes almost nothing will get fixed, and that feels too pessimistic for a company with this much cash, these margins, and a leadership team that has named the problem. A small starter position, or a spot on the watch list, makes sense here, with the Dec. 10 third-quarter report as the first test. Before you buy stock in Lululemon Athletica Inc., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lululemon Athletica Inc. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,330,110!* Now, it's worth noting Stock Advisor's total average return is 924% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 21, 2026. Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike and Walmart. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy. Lululemon Is Down 54% and Trades at 8.5 Times Earnings. Is Wall Street Getting This Stock Wrong? was originally published by The Motley Fool

Nike (NKE) stock fell 3.6% on October 2, 2026, the first session after its Q1 FY2027 report, while the S&P 500 rose 0.7%. The fall came even though Nike earned $0.48 a share, ahead of the $0.44 analysts expected. So what did Nike say on its call that mattered more than the earnings beat? Nike Expects A Year Of Shrinking Revenue Management expects revenue to decline by a high-single-digit percentage in fiscal 2027. Nike started giving a full-year outlook on this call, and it included an earnings forecast. Management expects adjusted earnings of $1.15 to $1.35 a share, against analyst estimates of $1.65. The quarter itself fell short on sales. Revenue of $11.21 billion came in 1.9% below what analysts expected. Nike stock also fell further than its peers: over the same session, G-III Apparel lost 0.7% and Tapestry lost 0.9%. The forecast, along with the revenue miss, appears to be what holders were reacting to. How Long Does Nike Expect Sales To Keep Falling? Nike expects the pressure on sales to last through the rest of fiscal 2027 and into fiscal 2028, management said on the Q1 FY2027 call. Nike's revenue rose 0.2% in its last full fiscal year after falling 9.8% the year before, but the pause was short. Revenue fell 4% in the first quarter, and Nike expects a steeper fall for the full year. Part of the decline is deliberate. Nike Sportswear, which made up just under half of quarterly revenue, was down by a low-double-digit percentage. Nike cut revenue from its Dunk line by nearly 50% on purpose, and management said tighter supply should help it sell more at full price. Greater China fell 26%, and management said its actions there will weigh on the region even more than in the first quarter. Nike's performance business grew by a high-single-digit percentage, but management said that business is not yet large enough to offset the rest. What Did Nike's Management Leave Unanswered? Management did not say what gross margin Nike will earn on those lower sales. Asked on the call where gross margin would land for fiscal 2027, management declined to give a forecast. Gross margin was 42.8% in the first quarter, up 60 basis points from a year earlier. Supply chain cost savings and currency helped, though discounts increased in the quarter. Profit is where holders are most exposed, since management expects operating profit to fall by a greater percentage than revenue. Nike said it will update its full-year outlook as the year progresses. Its second-quarter results are the next report where it could do so. If Nike still expects adjusted earnings of $1.15 to $1.35 a share at that report, the year is going as management planned. Does This Mean You Should Act On NKE? Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose. There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

lululemon athletica inc. (NASDAQ:LULU) closed at $94.46 on October 2, down 45.75% over twelve months. The shares now cost less than nine times what the company earned last year. That is a department store multiple attached to a brand that spent a decade commanding a premium. Two groups are looking at the same numbers and reaching opposite conclusions, which is what makes this one worth examining. READ ALSO: Is Best Buy's (BBY) Moat Narrowing as Electronics Move Online for Good? Start with what has not broken. Lululemon still earns 30.90% on equity. That is the figure that separates a brand in decline from a brand in trouble, and very few retailers of any kind reach it. The 13.21% operating margin says the same thing. Nobody is discounting their way out of this yet. Cash generation holds up too. Operating cash flow was $1.98 billion against reported net income of $1.42 billion, so the earnings are arriving as cash rather than as accounting entries. Levered free cash flow of $1.15 billion is lower than the reported profit, which is the cost of opening and fitting out stores. The balance sheet is manageable, with $2.14 billion of debt against $1.39 billion of cash. DON'T MISS: Costco (COST) vs Walmart (WMT): Which is a Better Stock to Buy? Now the case against, which is not about this year's profit. Revenue fell 4.30% in the most recent quarter, and earnings fell 11.20%. For a company whose entire valuation rested on growth, a shrinking top line changes the question being asked. The multiples carry the warning. Lululemon trades at 8.54 times trailing earnings and 10.74 times forward estimates. A forward multiple above the trailing one is the market saying earnings will be lower next year than last. The stock is not cheap on what it will earn, only on what it did earn. Short sellers have taken this further than most. Some 13.07% of the float is sold short, which is a large position against a profitable company with a strong balance sheet. The structural worry is that athletic apparel has very low barriers. A brand that loses its cultural position has nothing underneath it, because anyone can make the product. There is a consumer brand growing rather than shrinking at a similar multiple. You can find it here. The margins and the return on equity say the brand still has pricing power, and the falling revenue says fewer people are paying it. Those two facts can coexist for a while and not indefinitely. On price, almost nothing is demanding. Enterprise value to EBITDA of 4.86 times is roughly what the market pays for a business it expects to be smaller in five years. The company pays no dividend, so an investor earns nothing while waiting for the question to resolve. We ranked this year's best performing dividend payers here. The numbers say this is a good business at a low price. A 30.90% return on equity, operating cash flow well ahead of reported profit, and 4.86 times enterprise value to EBITDA are not the markers of a broken company. However, revenue is falling and the forward multiple sits above the trailing one. Some 13.07% of the float is positioned for it to get worse. The number to watch is revenue, because at this multiple nothing else is in question. lululemon athletica inc. (NASDAQ:LULU) was held by 51 hedge funds with a combined stake value of about $0.61 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 61 hedge fund holders with a cumulative investment value of around $1.14 billion in the previous quarter. While we acknowledge the potential of LULU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: What is eBay's (EBAY) Economic Moat, and is it Widening or Narrowing? and Walmart (WMT) Says its Digital Shelf Labels Do Not Use Personal Data to Set Prices This article is originally published at Insider Monkey.

Cintas Corporation CTAS reported first-quarter fiscal 2027 adjusted earnings of $1.39 per share, which beat the Zacks Consensus Estimate of $1.35 by 3.0%. The bottom line increased 15.8% from the year-ago quarter. Revenues of $3.01 billion surpassed the consensus estimate of $2.97 billion by 1.3% and rose 10.9% year over year. The top line benefited from 8.9% organic revenue growth, reflecting growth after adjusting for acquisitions, foreign currency movements and workday differences. Record gross and operating margins were other key highlights in the quarter. The company has two reportable segments, Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses are included in All Other. Quarterly sales data are briefly discussed below. Cintas' Uniform Rental and Facility Services segment generated revenues of $2.29 billion, up 9.7% year over year from $2.09 billion. Segment operating income rose to $575.09 million from $499.94 million. The First Aid and Safety Services segment delivered revenues of $388.52 million, increasing 16.1% from $334.66 million in the prior-year quarter. Operating income climbed to $99.54 million from $80.33 million. Revenues from the All Other segment totaled $330.73 million, up 13.1% from $292.40 million a year ago. Segment operating income increased to $51.67 million from $37.60 million. Cintas Corporation price-consensus-eps-surprise-chart | Cintas Corporation Quote Cintas' cost of sales totaled $1.46 billion compared with $1.35 billion in the year-ago quarter. Gross margin increased 13.7% to $1.55 billion, while gross margin, as a percentage of revenues, expanded to 51.5% from 50.3%. Selling and administrative expenses were $827.24 million, up 10.5% year over year. The company also incurred $14.41 million of transaction expenses related to the proposed UniFirst Corporation acquisition. Operating income rose 15.2% to $711.89 million. Operating margin improved to 23.6% from 22.7% in the prior-year quarter. Net income increased 12.3% to $551.71 million, while net income margin was 18.3% compared with 18.1%. The effective tax rate increased to 20.0% from 17.6%. In the first quarter of fiscal 2027, Cintas generated $572.33 million in net cash from operating activities, up from $414.48 million in the year-ago period. Capital expenditures totaled $107.53 million compared with $101.96 million a year earlier. Free cash flow increased to $464.80 million from $312.52 million. Net cash used in investing activities was $117.37 million, reflecting capital expenditures, purchases of investments and business acquisitions. During the quarter, the company repurchased common stock worth $315.71 million and paid $180.70 million in dividends. Net cash used in financing activities totaled $500.17 million. Cintas exited the quarter with cash and cash equivalents of $243.60 million compared with $289.02 million at the end of fiscal 2026. Accounts receivable increased to $1.59 billion from $1.56 billion, while inventories declined to $433.29 million from $446.44 million. Total current assets were $3.93 billion compared with $3.85 billion at May 31, 2026. Long-term debt was $1.43 billion, while debt due within one year totaled $999.29 million. Total shareholders' equity increased to $5.20 billion from $5.14 billion. For fiscal 2027, the company raised its revenue guidance to $12.15-$12.27 billion from the prior projection of $12.10-$12.25 billion. Adjusted earnings per share are now projected in the range of $5.45-$5.54, up from $5.36-$5.50 previously. The guidance excludes expected impacts from the proposed UniFirst acquisition and assumes no future acquisitions and constant foreign exchange rates. Fiscal 2027 also has one more workday than fiscal 2026. Cintas expects net interest expense of approximately $103.00 million compared with $101.20 million in fiscal 2026, with the increase primarily tied to amortization of bridge loan financing expenses related to UniFirst. The company projects an effective tax rate of 20.4% for fiscal 2027. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. In the third quarter of fiscal 2026 (ended June 2026), Spectrum Brands Holdings, Inc. SPB reported adjusted earnings from continuing operations of $2.79 per share, increasing 125% from $1.24 in the year-ago quarter and surpassing the Zacks Consensus Estimate of $1.49. Net sales increased 7.7% year over year to $753.3 million and surpassed the Zacks Consensus Estimate of $732 million. Interparfums, Inc. IPAR posted quarterly earnings of 95 cents per share in the second quarter of 2026, which decreased 4% from 99 cents reported in the prior-year period. The metric missed the Zacks Consensus Estimate of $1.04 per share. Consolidated net sales rose 2% to $341 million from $333.9 million in the year-ago quarter. Organic sales rose 1%. Excluding headwinds related to the war in the Middle East, second-quarter organic sales increased 4%. lululemon athletica inc. LULU reported adjusted EPS of $2.06 in the second quarter of fiscal 2026 (ended July 2026), which declined 33.5% year over year but surpassed the Zacks Consensus Estimate of $1.79 by 15.1%. The company's revenues declined 4% from the year-ago period to $2.42 billion and 5% on a constant-dollar basis. Revenues missed the Zacks Consensus Estimate of $2.47 billion by 2.1%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cintas Corporation (CTAS) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report Interparfums, Inc. (IPAR) : Free Stock Analysis Report Spectrum Brands Holdings Inc. (SPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cintas Corporation CTAS is scheduled to release first-quarter fiscal 2027 (ended August 2026) results on Sept. 23, before market open.The Zacks Consensus Estimate for CTAS’ fiscal first-quarter revenues is pegged at $2.97 billion, indicating growth of 9.2% from the prior-year quarter’s figure. The consensus mark for earnings is pinned at $1.35 per share, which has been stable in the past 60 days. The figure indicates growth of 12.5% from the year-ago quarter's figure.The company has a stellar earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average beat being 1.8%. In the last reported quarter, its earnings of $1.29 per share beat the consensus estimate of $1.24 by 4%.Let’s see how things have shaped up before Cintas’ fiscal first-quarter earnings release. Strong customer retention and penetration of additional products and services into existing customers are expected to have driven the Uniform Rental and Facility Services segment’s performance in the fiscal first quarter. The Zacks Consensus Estimate for the segment’s revenues is pegged at $2.27 billion, indicating an 8.7% jump from the year-ago reported number.Solid demand for the company’s AED Rentals is likely to have supported the performance of the First Aid and Safety Services segment. Also, strong customer retention levels and an improved sales mix are likely to have boded well for the segment. The consensus mark for the segment’s revenues is pegged at $378 million, which implies a 13.2% increase from the year-ago reported figure.Also, synergistic gains from the acquisitions of Paris Uniform Services (March 2024) and SITEX (February 2024) are expected to have boosted Cintas’ top line in the to-be-reported quarter. While the Paris Uniform Services buyout has strengthened CTAS’ market presence in Pennsylvania, New York, Maryland and West Virginia, the SITEX acquisition has enhanced its footprint in the U.S. central Midwest region.However, the escalating selling, general and administrative (SG&A) expenses pose a threat to CTAS’ bottom line. An increase in employee-partner-related expenses is expected to have pushed up the SG&A expenses, which is likely to have impacted the company’s margins in the fiscal first quarter.Given Cintas’ extensive geographic presence, its operations are subject to global political risks and foreign exchange headwinds. A stronger U.S. dollar is likely to have hurt CTAS’ overseas business in the quarter. Cintas Corporation price-eps-surprise | Cintas Corporation Quote Our proven model predicts an earnings beat for CTAS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below. Earnings ESP: CTAS has an Earnings ESP of +3.60% as the Most Accurate Estimate is pegged at $1.40 per share, higher than the Zacks Consensus Estimate of $1.35. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: CTAS currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here. In the third quarter of fiscal 2026 (ended June 2026), Spectrum Brands Holdings, Inc. SPB reported adjusted earnings from continuing operations of $2.79 per share, increasing 125% from $1.24 in the year-ago quarter and surpassing the Zacks Consensus Estimate of $1.49.Net sales increased 7.7% year over year to $753.3 million and surpassed the Zacks Consensus Estimate of $732 million.Interparfums, Inc. IPAR posted quarterly earnings of 95 cents per share in the second quarter of 2026, which decreased 4% from 99 cents reported in the prior-year period. The metric missed the Zacks Consensus Estimate of $1.04 per share.Consolidated net sales rose 2% to $341 million from $333.9 million in the year-ago quarter. Organic sales rose 1%. Excluding headwinds related to the war in the Middle East, second-quarter organic sales increased 4%.lululemon athletica inc. LULU reported adjusted EPS of $2.06 in the second quarter of fiscal 2026 (ended July 2026), which declined 33.5% year over year but surpassed the Zacks Consensus Estimate of $1.79 by 15.1%.The company’s revenues declined 4% from the year-ago period to $2.42 billion and 5% on a constant-dollar basis. Revenues missed the Zacks Consensus Estimate of $2.47 billion by 2.1%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cintas Corporation (CTAS) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report Interparfums, Inc. (IPAR) : Free Stock Analysis Report Spectrum Brands Holdings Inc. (SPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

lululemon athletica inc. LULU reported second-quarter fiscal 2026 results that reflected a contrast between tariff-related earnings support and continued weakness in underlying demand trends. While tariff refunds helped lift reported profitability, revenue declines, weaker comparable sales and reduced guidance highlighted ongoing operating challenges.The company’s latest results have shifted investor focus toward whether temporary margin benefits can offset weaker traffic, inconsistent product performance and pressure across key markets. LULU currently carries a Zacks Rank #5 (Strong Sell), with a Value Score of B, Growth Score of B, Momentum Score of F and VGM Score of C.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. lululemon’s second-quarter results received support from tariff refunds. The company recognized $134.5 million of IEEPA tariff refunds and $4.1 million of associated interest, which increased diluted earnings per share by $0.86.The benefit improved reported profitability but does not fully represent the underlying cost environment. Second-quarter gross margin increased 200 basis points year over year to 60.5%, primarily due to the tariff refund benefit. Excluding the refund, product margin remained pressured by tariffs, markdowns and fixed-cost deleverage.Operating income declined 13% year over year to $453.7 million, while operating margin decreased to 18.8%. The company also noted that tariffs, excluding the refund benefit, negatively affected gross margin during the quarter.The impact of tariff refunds highlights the difference between reported earnings performance and underlying operating trends, which remain tied to demand recovery, pricing and cost management. lululemon athletica inc. price-consensus-eps-surprise-chart | lululemon athletica inc. Quote Revenue trends reflected uneven performance across regions. Second-quarter revenue declined 4% year over year to $2.4 billion, while comparable sales declined 9% and 10% on a constant-dollar basis.The Americas remained the largest pressure point. Revenue in the region declined 8%, while comparable sales decreased 12%. The United States also reported an 8% revenue decline, while Canada revenue declined 11% on a reported basis.International markets provided some support, although growth moderated. China Mainland revenue increased 4% on a reported basis but declined 2% on a constant-dollar basis, while Rest of World revenue increased 5% on a reported basis and 6% in constant currency.The competitive environment adds pressure as global athletic and lifestyle apparel brands continue to invest in product innovation and consumer engagement. NIKE Inc. NKE competes across athletic footwear and apparel categories through its global brand platform, product launches and direct-to-consumer strategy. Ralph Lauren Corporation RL also operates in the broader premium apparel market, with its lifestyle positioning creating overlap in select consumer segments where brand identity and product differentiation influence purchasing decisions.Management cited weaker traffic, softer product launch responses and brand sentiment pressures as factors affecting performance. In China Mainland, the company said negative commentary in media and social channels affected traffic and sales momentum. Management lowered its fiscal 2026 outlook as current trends pointed to a slower recovery. The company now expects full-year revenue of $10.35 billion to $10.50 billion, representing a decline of 5% to 7%, with earnings per share projected at $9.48 to $9.73.For the third quarter of fiscal 2026, lululemon expects revenue of $2.29 billion to $2.32 billion, representing a decline of 10% to 11%. Earnings per share are expected at 93 cents to 98 cents compared with $2.59 in the prior-year quarter. Image Source: Zacks Investment Research The revised outlook reflects continued pressure across key operating areas. Management noted that the second-half outlook assumes a slower trend in North America and relatively consistent international performance compared with recent results.The company also expects full-year gross margin to decline approximately 80 basis points, with higher markdowns and fixed-cost deleverage offsetting benefits from tariff mitigation efforts. lululemon is responding to weaker demand through changes in product development, inventory management and expense controls. Management’s action plan focuses on product creation, product activation and enterprise efficiency to improve full-price sales trends over time.The company is increasing marketing investments while also tightening expenses across the organization. Initiatives include supply chain efficiencies, procurement savings, technology investments and tighter control of discretionary spending.Product strategy remains a key part of the recovery effort. Management highlighted stronger performance from newer away-from-body women’s bottoms, including Groove Wide-Leg, Align Foldover Jogger, Breezily and updated Dance Studio Pant. However, leggings sales declined approximately 20% in the second quarter, reflecting changing consumer preferences.lululemon is also improving inventory responsiveness by chasing approximately 20% more volume this year compared with last year, allowing the company to adjust faster to customer demand. LULU’s Zacks Rank and Zacks Style Scores provide additional context following the earnings release. Zacks Style Scores are designed as complementary indicators that evaluate value, growth, momentum and combined style characteristics alongside the Zacks Rank.The stock’s Value Score of B reflects its lower valuation metrics, while the Growth Score of B highlights longer-term growth characteristics. The Momentum Score of F reflects weaker recent price trends, and the VGM Score of C combines these factors into a broader style measure.The latest earnings report highlights the difference between temporary earnings support and underlying business momentum. Tariff refunds provided near-term assistance, but investors continue to monitor revenue trends, product acceptance and management’s recovery initiatives as lululemon works through a challenging operating environment. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report lululemon athletica inc. (LULU) : Free Stock Analysis Report NIKE, Inc. (NKE) : Free Stock Analysis Report Ralph Lauren Corporation (RL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Jim Cramer says lululemon athletica inc. (NASDAQ:LULU) has gone from a premier growth stock to a company facing a serious deterioration in demand, competition, and execution. After its latest results, Cramer said investors should resist buying the stock simply because its valuation has fallen sharply. During the September 10 episode of Mad Money, he said: The company’s second-quarter results support the concern. Revenue fell 4% year over year to $2.4 billion, while comparable sales declined 9%. Americas comparable sales fell 12%, and international comparable sales declined 3%. The company also cut its full-year revenue forecast to $10.35 billion-$10.50 billion and diluted EPS outlook to $9.48-$9.73. Cramer said that lululemon athletica inc.’s (NASDAQ:LULU) difficulties are no longer limited to a temporary slowdown. He pointed to a much more crowded athleisure market, saying that “10 years ago there was Lululemon and not much else,” while the company now faces Alo Yoga, Vuori, Athleta, and Fabletics. He added: That pressure is significant because the company is simultaneously trying to restore growth in its largest market and protect premium pricing. Cramer also sees execution and leadership problems adding to the pressure. Heidi O’Neill, a Nike veteran, became CEO on September 8 after an extended transition. lululemon athletica inc. (NASDAQ:LULU) reported diluted EPS of $2.92, but $0.86 of that came from tariff refunds and related interest. The company received $134.5 million in tariff refunds, while gross margin benefited by 560 basis points from the refunds. Cramer commented: He said the latest quarter could have been a “kitchen sink quarter” that cleared out bad news before the new CEO took over. But he remains unwilling to buy. Insider Monkey’s tracking of more than 1,000 hedge funds showed that 51 hedge funds held Lululemon in the second quarter, down from 61 in the first quarter. Short positioning has moved in the opposite direction, as short interest stood at roughly 11%-13% of the float. Cramer acknowledged that lululemon athletica inc.’s (NASDAQ:LULU) valuation has fallen dramatically, but said a lower multiple is not enough while earnings estimates continue to move lower. For now, Cramer sees the stock as a turnaround situation that needs evidence of improving demand and execution before the valuation becomes compelling. His verdict was: While we acknowledge the potential of LULU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Jim Cramer Says He Is Not Going to Put His Money on AstraZeneca (AZN) and Jim Cramer on Trinity Industries (TRN): “Shouldn't Be Down This Much”. Disclosure: None. Follow Insider Monkey on Google News.

Image source: The Motley Fool. Thursday, Sept. 3, 2026 at 4:30 p.m. ET Vice President, Investor Relations - Howard Tubin Interim Co-CEO and Chief Financial Officer - Meghan Frank Interim Co-CEO, President and Chief Commercial Officer - Andre Maestrini Operator: Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Howard Tubin, Vice President, Investor Relations for lululemon athletica. Please go ahead. Howard Tubin: Thank you, and good afternoon. Welcome to lululemon's second quarter earnings conference call. Joining me today are Meghan Frank, Interim Co-CEO and CFO; and Andre Maestrini, Interim Co-CEO, President and Chief Commercial Officer. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements reflecting management's current forecast of certain aspects of lululemon's future. These statements are based on current information, which we have assessed, but which by its nature is dynamic and subject to rapid and even abrupt changes. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business, including those we have disclosed in our most recent filings with the SEC including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we expressly disclaim any obligation or undertaking to update or revise any of these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our quarterly report on Form 10-Q and in our earnings press release. In addition, the comparable sales metrics given on today's call are on a constant dollar basis. The press release and accompanying quarterly report on Form 10-Q are available under the Investors section of our website at www.lululemon.com. On today's call, Meghan and Andre will begin by discussing recent business developments across our regions and the plans and strategies we are implementing to drive improved performance. Meghan will then discuss our detailed Q2 financials, the impact recent trends are anticipated to have on our performance for the remainder of the year and our revised guidance outlook. And then the team will be happy to take your questions. Before I turn the call over to Meghan, I'd like to remind investors to visit our investor site, where you'll find a summary of our key financial and operating statistics for the second quarter as well as our quarterly infographic. Meghan, over to you. Meghan Frank: Thanks, Howard. Welcome, everyone, and thank you for joining us. I want to start the call by taking you through our Q2 results, what we're seeing in the business today and how this is informing our decision to lower our guidance for the full year. Then Andre and I will spend most of our time discussing North America and China Mainland, what's happened since our last earnings call and the actions we are taking across these markets to improve the trajectory of the business. As you recall, we began the year with an action plan focused on three pillars: product creation, product activation and enterprise enablement. A key objective of our plan is to strengthen our full price sales trajectory and position the company for long-term growth. In Q1, we saw some encouraging signs indicating we were moving in the right direction to strengthen performance in North America while continuing to expand our global growth engine. As we moved into Q2, we faced negative commentary in the media and social channels, which impacted traffic, and softer-than-planned response to some new product launches, which contributed to a moderating sales trend. As you've seen from our press release, Q2 revenue came in below our expectations with the shortfall driven predominantly by China Mainland, where revenue grew 4%. North America finished down 8% for Q2, slightly ahead of our guidance. As we move into Q3, while we are seeing good guest reaction to our activations and some of our newer styles, the overall response to our product launches remains inconsistent. And we've continued to see pressure on the brand in both of our largest markets. Based on our assessment of these current trends, we've updated our guidance for the remainder of the year. At the enterprise level, we have several key actions underway to improve our performance. Andre and I will get into the regional detail in a moment. Our product teams are chasing into strong performers, including our Groove and Define styles, more aggressively than in the past and working with vendors to strategically manage future inventory flows. On brand, we are moving forward with our increased marketing investments in the back half of the year. We're seeing strong community engagement with our recent campaigns and activations. And while we haven't yet seen an impact on the top line trajectory, we are encouraged by the response. And on expenses, we've been continuing to drive efficiency across the organization. Given current trends, we've heightened that focus in the back half of the year while protecting investments in product and brand. We're excited our incoming CEO, Heidi O'Neill, joins us next week. And we expect she will take a deep dive into the business, evaluating our strategy and current action plans. And we look forward to the fresh perspective she will bring to define the path forward for lululemon's next chapter. In the near term, our teams remain focused on execution. As we look to the future, we remain confident in the underlying strength of lululemon's brand, the connection we have to our highly engaged community of guests and ambassadors, and the equity we have built. We believe our greatest opportunity is to build on this foundation through continued investment in product innovation, reinforcing our premium positioning, and the long-term brand health. At the same time, our strong financial position allows us to invest in near-term actions that support full price sales and top line improvement while remaining focused on the significant growth opportunities ahead. I'll now share an update on our action plan and then hand it over to Andre to discuss regional performance. The markets we operate in are competitive, which makes it imperative for us to focus on unique and innovative ways to inspire our guests. As you know, we've been working on this through our action plan with a focus on product and brand. We anticipated our plan would take some time to gain traction as we bring in new innovations, elevate our store and digital experience, and increase and redirect our marketing spend. But we expected a better response than we are seeing as we enter the second half of the year. So let me share some details, starting with product. As we've stated on prior calls, a top priority for the management team is returning to full price sales growth as we focus on restoring and protecting our brand health for the long term. Despite the headwinds we are experiencing, we are moving forward with our actions in this area, which will include bringing updates to our core franchises, introducing new styles, overall SKU reductions and tightly managing inventory levels. In addition, we are leaning into our chase capabilities. As we discussed on prior calls, faster chase times allow us to read and react to guest demand and get back into certain strong-performing styles more quickly. We're chasing approximately 20% more volume this year relative to last year. In Q2, while we're seeing green shoots in product, particularly within some of our newer away-from-body bottoms for women, we are also seeing an inconsistent performance in our assortment overall. This included a greater-than-expected slowdown in some of our core categories, particularly leggings. In women's tops, guests are responding well to Scuba and Steady State, now offered in our SuperLoft fabric, and our Define franchise continues to perform well. In men's, we are seeing strength in Metal Vent Tech tees and our golf tops, supported by the storytelling campaigns we developed around some of our elite ambassadors, including Lewis Hamilton and Min Woo Lee. We're also pleased with the halo effect designed-for-golf tops are having on our ABC bottoms as they pair well together and provide guests with a versatile and technical solution on the golf course. Let me now spend a moment on our women's bottoms business, where performance has been mixed. Leggings trends so far this year have been below our expectations, with sales declining approximately 20% in Q2. While we have been planning into lower legging sales, and we are seeing good traction in several of our away-from-body styles, we are not yet able to fully offset these declines. Leggings remain an important category for us, where we remain the market leader. The wellness trend is strong. We continue to be a leader in technical fabric development, and guests continue to purchase our leggings for their exercise and training needs, particularly yoga and Pilates. We remain committed to the category, but there are shifts occurring with guests looking for away-from-body silhouettes. We're happy with the performance of several new away-from-body styles we've recently introduced, including the Groove Wide-Leg, the Align Foldover Jogger, the Breezily and our updated Dance Studio Pant. All are trending well, and we expect momentum to build in the back half of the year and into 2027. As we look at the second half of the year, in addition to away-from-body bottoms, we'll continue to focus on new and updated styles across our activities. You'll see updates across run with new cold weather innovations in outerwear featuring Wunder Puff and our Featherweight Down franchise, and a new version of our popular Big Cozy, to highlight just a few. I also wanted to mention accessories, where we experienced a 13% decline in Q2. While backpacks are strong, we are seeing overall softness in bags. In addition, we are strategically editing the overall accessories assortment to better align with our go-forward vision for the brand. Moving now to product activations and marketing. We are working to strengthen brand relevance, desirability and demand by engaging more directly with guests through social channels and differentiated community experiences while using those platforms to tell richer stories about our brand, products and innovation. We held several successful events in Q2 and into Q3, and engagement levels are encouraging. Let me highlight 2. In June, we celebrated our foundation in yoga with the launch of our summer series. We partnered with leading yoga, Pilates and sculpt instructors to bring free classes to tens of thousands of guests across 70 cities in the U.S. and Canada. More recently, in August, we brought back our SeaWheeze Half Marathon and Festival for the first time since 2019. The reaction from guests, the local community and across social media was outstanding. Nearly 10,000 runners from 24 countries ran the half marathon, and approximately 14,000 attendees joined us for an evening of movement and music headlined by DJ John Summit. This event brought incredible energy to our hometown market of Vancouver, and through our virtual SeaWheeze challenge on Strava, we extended participation well beyond race weekend with more than 85,000 participants from 120 countries around the world. Based on the strong response, we already made the decision to bring back SeaWheeze again next summer. Guest engagement in events like this demonstrate the passion for our brand and the strength of our connections with the communities we serve. We are increasing our marketing investment in the back half of the year to drive improved brand heat, guest acquisition, traffic and overall top line performance. We are investing more heavily in mid-funnel creator and social content to build relevance, engagement and product consideration. One recent example is our YouTube series featuring some of our elite athletes. We remain confident these investments will help to reignite our sales trends over time as we continue to elevate our product and marketing execution. Let me now speak to our enterprise enablement and cost management initiatives. We've been reducing our expense base and working across the enterprise to operate as efficiently as possible. Given current top line trends and our expectations for the back half, we are taking an even more aggressive stance on expense management. Our ongoing initiatives continue: efficiencies across our supply chain and non-merchandise procurement, and implementation of new technologies, including AI-powered systems and automation. On discretionary spending, we are driving new efficiencies across travel, professional fees, store labor hours and head count growth moderation. On real estate, we continue to scrutinize every deal across all new store openings and optimizations. We're now planning approximately 35 net new store openings this year, down from our guidance of approximately 40 last quarter. And our plans call for a significant reduction in pop-up stores from 65 at the end of last year to approximately 40 by the end of 2026. We're being intentional with our cost management strategies and looking to drive enduring efficiencies beyond this year. We won't take steps that will negatively impact the brand or our long-term growth potential, but we recognize that current top line trends necessitate a smaller expense profile, and we are acting accordingly. We know there is much more work to be done. Our management team leaders and employees are focused on serving our guests and executing initiatives to drive an inflection in our business. Now let me turn it over to Andre to discuss regional performance in more detail. Andre? Andre Maestrini: Thanks, Meghan. It's good to be here with you today to discuss our results and the work underway across the business. While we are focused on improving the trajectory of the business in the short term, we are also making the appropriate decision to strengthen our foundation and drive more sustainable growth over the medium and long term. Let me provide more details about our regional performance beginning with North America. In Q2, revenue declined 8%, slightly ahead of our expectations. In the U.S., we saw a decrease of 8%, while in Canada, revenue was down 11% on a reported basis and down 9% on a constant currency basis. Meghan already spoke to our global product and brand initiatives that we expect will benefit all regions. So let me spend a few moments updating you on our strategies to enhance the guest experience in store and online. We are seeing good results in our store, where we are implementing new ways to elevate the guest experience through updated fixture packages, further reductions in SKU density and increased localization of assortment. We're also better organizing the guest journey by changing product adjacencies and merchandising by activity. In digital, we have a sharp focus on storytelling and driving conversion when guests visit our e-commerce sites. We recently redesigned our homepage as well as category detail page. And in the next few weeks, we will be updating also our product detail page. Shifting now to China Mainland. As Meghan mentioned, we have seen several issues impacting brand sentiment and product in China, which have hurt traffic and overall sales momentum. This began with spikes of negative commentary in the media and on social channels at the end of Q1 and early Q2, and was compounded by the additional commentary post our Q1 call related to an event we held on the Great Wall of China. These factors have contributed to softness in both our store and digital channels. Performance in e-commerce further impacted by a decision made by Tmall not to anniversary their 618 event in the same way as last year. In addition, we did not participate in promotions following this event. In Q2, revenue increased by 4% on a reported basis and declined 2% on a constant currency basis, well below our expectation. As you know, we've experienced rapid growth in China Mainland over the last several years. But while we are disappointed with the current performance in the region, we are focused across both product and brand efforts to drive inflection. And we remain confident in our teams, our strategy, the underlying strength of our brand and the opportunity China Mainland continues to hold for lululemon's future. End of Q2, we were pleased with the guest response to our Together Feels Better campaign. This featured both in-store and online moments, with the highlight being a live stream event simultaneously broadcast across 5 platforms. We featured lululemon ambassador and world champion swimmer, Wang Shun, along with other athletes to bring to life our campaign message. And we are building further our credibility in tennis, and we're excited to celebrate with lululemon ambassador, Guo Hanyu, the first Chinese athlete in our ambassador roster to win a Grand Slam tennis title during Wimbledon. Looking ahead, we will strengthen our brand narrative and messaging through a multilayered approach, including key new store openings with associated activations, partnering with Tmall for a Super Brand Day event, and leverage our thought leadership in the well-being space with an event for World Mental Health Day. This moment and the guest engagement we continue to see with these campaigns and activations show the underlying strength of lululemon in the market and the potential that exists for us in China Mainland. Next, I will spend a few minutes on our Rest of the World segment, comprised of EMEA and APAC. In total, Q2 revenue in Rest of the World increased 5% on a reported basis and 6% in constant currency. Let me share a few more details, beginning with South Korea. This market continues to be one of our strongest across the globe, and we were excited to celebrate our 10th anniversary in August. We reopened our first-ever store in this market with our new design concept and hosted a special evening event and a series of movement classes attended by guests and ambassadors. In Australia, our top line performance has been impacted as we've seen the market grow increasingly promotional. As we are not joining in with promotional events, we have seen a slowing in guest purchase behavior, but we continue to see strong guest engagement with our events, with a recent example being our Sydney Marathon activation. In Japan, while the market is still experiencing reduced traffic of tourism, our brand remains strong. We recently opened our largest store in APAC in Tokyo, Harajuku district, and it's seen a great response from guests. And lastly, in EMEA, while our Middle East franchise business continues to be impacted by the conflict in the region, as does tourism in Europe, we remain excited about our potential in the region. Beginning last week, we launched our first marketing collaboration with the online leader, Zalando, across 12 markets in Europe, and we'll be showing up in unique ways at the Berlin Marathon later this month. And we continue to expand our presence through recent franchise store openings in Athens, Greece, and in Bucharest, Romania. This market expansion speaks to the still untapped demand for our brand in new markets as we look at our longer-term plans. I will now hand it back to Meghan to share more details about our financial performance. Meghan Frank: Thanks, Andre. Let me now get into the Q2 financial review and our updated guidance outlook. For Q2, total net revenue decreased 4% or 5% in constant currency to $2.4 billion and comparable sales decreased 10%. Within our regions and channels, results were as follows. North America revenue decreased 8% with comparable sales down 12%. By country, revenue decreased 11% or 9% in constant currency in Canada and decreased 8% in the U.S. China Mainland revenue increased 4% or decreased 2% in constant currency, with comparable sales decreasing 8%. And in our Rest of World segment, revenue increased by 5% or 6% in constant currency with comparable sales decreasing 3%. In our store channel, total sales decreased 6%, and we ended the quarter with 825 stores globally. Square footage increased 11% versus last year, driven by the addition of 41 net new lululemon stores since Q2 of 2025. During the quarter, we opened 9 net new stores and completed 12 optimizations. In our digital channel, revenues decreased 6% and contributed $0.9 billion of top line or 39% of total revenue. And by category, men's revenue decreased approximately 1% versus last year, and women's decreased 4%, while accessories and other declined by 13%. Gross profit for the second quarter was $1.46 billion, or 60.5% of net revenue, compared to 58.5% in Q2 2025. Gross margin increased 200 basis points compared to last year and was driven primarily by the following: 560 basis points of benefit from IEEPA tariff refunds, a 150 basis point decline in overall product margin driven predominantly by tariff impact and markdowns. Tariffs, exclusive of the refund, had a gross negative impact of 160 basis points in the quarter, offset by 100 basis points related to our enterprise efficiency initiatives. Markdowns increased 70 basis points. Deleverage on fixed costs was 230 basis points, driven by ongoing investments in our store fleet and regional mix and additional fulfillment costs as we optimize our North America DC network. Foreign exchange had 20 basis points of favorable impact. Excluding the tariff refund, gross margin was 50 basis points better than our guidance for a 410 basis point decline, driven by 40 basis points related to the reversal of an incentive compensation accrual and favorable channel and category mix, offset by slightly higher markdowns. Moving to SG&A. Our approach continues to be grounded in prudently managing our expenses while also strategically investing to strengthen our foundation and position lululemon for future growth. SG&A expenses were approximately $1.01 billion, or 41.7% of net revenue, compared to 37.7% of net revenue for the same period last year. The increase of 400 basis points relates to fixed cost deleverage, continued investment in guest experience, including store labor hours, marketing spend and fees related to the proxy contest. These were partially offset by an incentive compensation accrual reversal and our ongoing initiatives to prudently manage costs across the enterprise. Relative to our guidance for SG&A deleverage of 500 basis points, the improvement was driven by lower incentive compensation and additional actions to manage costs across the business. Operating income for the quarter was $454 million, or 18.8% of net revenue, compared to 20.7% of net revenue in Q2 2025. This result includes $134.5 million pretax benefit from IEEPA tariff refunds, which added 560 basis points to operating margin. Tax expense for the quarter was $138.1 million, or 29.6% of pretax earnings, compared to an effective tax rate of 30.5% a year ago. The decrease was primarily due to a decrease in nondeductible expenses in international jurisdictions partially offset by adjustments upon the filing of income tax returns. Net income for the quarter was $329 million, or $2.92 per diluted share, compared to $3.10 for the second quarter of 2025. Tariff refunds and associated interest, net of tax, contributed $0.86 to EPS. Capital expenditures were approximately $150 million for the quarter compared to approximately $178 million in the second quarter last year. Q2 spend relates primarily to investments to support long-term business growth including our multiyear distribution center project, store capital for new locations, relocations and renovations and technology investments. Turning to our balance sheet highlights. We ended the quarter with $1.4 billion in cash and cash equivalents and nearly $600 million of available capacity under our committed revolving credit facility. Inventory at the end of Q2 is $1.7 billion, a decrease of 1% on a dollar basis. On a unit basis, inventory decreased approximately 7%. The difference between dollar inventory growth and unit inventory growth relates predominantly to higher tariff costs and foreign exchange. We repurchased approximately 2.7 million shares at an average price of $120. Let me shift now to our guidance for Q3, which has gotten off to a slow start. While we are working hard to change the trajectory of the business and adapting our action plan in light of current trends, we're taking a prudent approach to our outlook for the second half of the year. At the highest level, our revenue guidance for the second half assumes a slower trend relative to Q2 in our North America business and performance relatively consistent with Q2 trends in international. And while our teams remain hard at work executing our plans across product, brand and guest experience, and we strive to do better, we have not factored this potential into our financial outlook. For Q3, we expect revenue in the range of $2.29 billion to $2.32 billion, representing a decline of 10% to 11%. We expect to open approximately 17 net new company-operated stores and complete 15 optimizations. By region, on a reported basis, we expect North America to decline in the mid-teens, with the U.S. also in that range, and Canada lower. We expect the China Mainland and the Rest of World to increase 3% to 5%. We expect gross margin in Q3 to decrease approximately 250 basis points compared to Q3 of 2025. While we expect an improvement in product margin, this will be offset by deleverage on fixed costs and ongoing investment in store openings, optimizations and our distribution network. When looking specifically at markdowns, we expect an increase of approximately 60 basis points versus last year. While we continue to focus on improving full price selling, the slower-than-expected top line trends will necessitate additional seasonal clearance. In Q3, we expect our SG&A rate to deleverage by 800 basis points relative to Q3 2025. This increase will be driven primarily by deleverage associated with lower sales than initially expected, increased marketing and expense timing versus last year. And we will continue to invest strategically in our growth initiatives in IT infrastructure. When looking at operating margin for Q3, we expect it to be approximately 6.5% versus 17% in Q3 2025 for the reasons I just mentioned. Turning to EPS. We expect earnings per share in the third quarter to be in the range of $0.93 to $0.98 versus EPS of $2.59 a year ago. We expect our effective tax rate in Q3 to be approximately 30%. When looking at inventory at the end of Q3, we expect dollar growth to be in the low single-digit range with units down slightly. Turning to our full year 2026 guidance outlook. We now expect revenue to be in the range of $10.35 billion to $10.5 billion, down 5% to 7% relative to 2025. By region, we now expect revenue in North America to be down in the low double digits, with the U.S. also in that range, and Canada slightly lower. We now expect revenue in China Mainland to be up in the high single digits. And in Rest of World, we now expect revenue to increase in the mid-single digits. Globally, we now expect to open approximately 35 net new company-operated stores in 2026 and continue to expect to complete approximately 35 optimizations. This will contribute to overall square footage growth of approximately 10%. Our new store openings in 2026 will include approximately 10 stores in North America, including 7 in Mexico and approximately 25 in our international markets. For the full year, we now expect gross margin to decrease approximately 80 basis points relative to last year. We expect an improvement in product margin driven by a 130 basis point positive impact related to the Q2 tariff refund plus ongoing benefits from our mitigation strategies. These benefits are expected to be offset by deleverage on fixed costs and ongoing investment on our new store openings, optimizations and our distribution center network. When looking at markdowns, we expect an increase for the full year of 40 basis points. When looking at tariffs more closely for the full year, our guidance now assumes a rate of 10% to 12.5% through September, and we continue to assume a rate of 20% for the remainder of the year. In addition, while we continue to participate in the refund process, our guidance assumes no additional recovery of tariffs paid under IEEPA. Turning now to SG&A for the full year. While we intend to realize significant savings related to the enterprise enablement pillar of our action plan, we now expect an increase of approximately 450 basis points versus 2025. This will be driven by increased deleverage associated with our updated view on top line, increased marketing spend and continued strategic investments in our business to support future growth, including market expansion and improving the guest experience by enhancing our omni capabilities. When looking at operating margin for the full year 2026, we now expect it to decrease by approximately 530 basis points versus last year, which includes the 130 basis point benefit from tariff refunds recognized in the second quarter. For the full year 2026, we expect our effective tax rate to be approximately 30% versus our 2025 effective tax rate of 29.5%. For the fiscal year 2026, we now expect diluted earnings per share in the range of $9.48 to $9.73 versus EPS of $13.26 in 2025. This updated range includes an $0.86 benefit from tariff refunds recognized in the second quarter but does not include the impact of any potential additional refunds through the balance of the year. Our EPS guidance also excludes the impact of any future share repurchases. When looking at inventory, we expect dollar growth to be up in the mid-single-digit range with units approximately flat. At the end of Q2, we had approximately $713 million remaining on our share repurchase program, which we will continue to utilize. Share repurchases remain our preferred method of returning cash to shareholders, and we continue to expect our repurchase levels in 2026 to be in line with 2025. Finally, for the full year, we now expect capital expenditures to be approximately $680 million to $700 million. The spend reflects investments to support business growth, including capital for new locations, relocations and renovations, DC and technology investments. Before we take your questions, I want to emphasize that we know there is significant work ahead for us. We're applying what we're learning this year to how we operate globally going forward. Our teams are executing against our action plan now, chasing into what's working, investing into brand and community and running a tighter expense base. Andre and I are confident in our leadership teams across every market, and we believe that with the right adjustments to our product assortment, marketing and community activations, improved revenue trends will follow. One thing is certain to me, our brand has real opportunity ahead of it. We've seen this with a response to SeaWheeze and engagement with our campaigns and in the strength of our teams around the world. We know our guests continue to love the brand, and we need to consistently give them the product and experience they can expect from lululemon. And as Heidi joins us next week, I'm confident that she'll help us realize this opportunity. Finally, I want to thank the leaders and employees of our company for their determination to make progress every day and for operating in a way that's consistent with our values as we innovate for our guests. Operator, we'll now take your questions. Operator: [Operator Instructions] The first question comes from Alex Straton with Morgan Stanley. Alexandra Straton: Can you just talk about, from a strategic perspective, like where you're at in your journey with stores and reducing SKUs and making it a better experience, and any fleet rationalization considerations going forward? I know you took the targets down. But as you think about it, bigger picture and longer term. Meghan Frank: Great. Thanks, Alex. I'll give some details on just stores overall, and then Andre is going to provide a little bit of color. So in terms of stores, we were scrutinizing every deal. We're opening 35 net new stores this year. About 10 of those net new stores in North America, 7 of those are in Mexico. Of the openings, we've got in North America, about half of them are pop-up conversions where we've got evidence of strong productivity. And then the balance would be strategic presence and then key market saturation. So we'll continue to take that posture as we move throughout '27 as well, really scrutinizing every deal. And then I'll pass it to Andre to provide more color. Andre Maestrini: Yes, absolutely. And what -- to really enhance the guest experience in our stores, specifically in North America, we have made several enhancements to premiumize this experience. It includes a less dense presentation, so we decreased SKUs by 15%, and now we are rolling it out in the rest of the fleet. We'll have a sharper focus on merchandising and VM, and we've seen that organizing the store by activities on one side and lifestyle has improved the storytelling and the engagement of the guest to the range. And in addition, we have a smaller subset of doors where we are testing additional enhancements that include further SKU reductions, more curated assortment based on local taste and preferences, new fixtures packages and also using more imagery and activity mannequins. So once the formula is nailed, we will scale it to the rest of the fleet. Alexandra Straton: Maybe just one quick follow-up on your promotion comments and how you guys not being promotional is potentially impacting you. Is that a global phenomenon or in certain markets? And also, is it in certain categories? Meghan Frank: Yes. I think what Andre was referring to was in certain markets where we're seeing them be more promotional, for example, Australia, and we are not participating in those promotions. I would say, overall, our goal has been to return to a healthy, full price penetration of business. Clearly with revenue not where we expected this year, we have more seasonal product to clear through by year-end, and that's reflected in our guide. So it's not promotions driving that. It's seasonal clearance primarily at end of season. Operator: The next question comes from Ike Boruchow with Wells Fargo. Irwin Boruchow: I'm not sure if this is for you, Meghan, but I kind of wanted to ask a bigger picture question about the cost structure of the business. Given the underperformance on top line and the fact that it doesn't feel like that's been fully diagnosed yet, the deleverage you guys are seeing is kind of indicative of a model that is built to be comping fairly positive. How quickly can you adjust the cost structure? And I don't know if that's getting out of leases or looking at the store base. But just curious the timing of that, because if the top line trajectory doesn't turn in the next couple of quarters, it just feels like this could get a bit messier as you kind of get into next year. So just curious, your thoughts. Meghan Frank: Thanks, Ike. Yes, as I mentioned, we are in action on the cost side. We have had an active work stream in cost management throughout this year, really focused on supply chain, procurement, technology. We have taken some near-term steps to manage discretionary expense. So across some of the buckets I mentioned, like travel, professional fees, store labor hours, moderating head count growth. I would say given current trends, we are taking a deeper look to rightsize the cost base to the current business, with the -- still protecting the long-term trajectory of the business and really primarily product and brand, where we feel like we really need to move on the sentiment side as well as support our product engine moving into '27. So I think too early to share beyond the guidance that we shared for '26, but we are taking a hard look across all aspects of our business model. Operator: The next question comes from Matthew Boss with JPMorgan. Matthew Boss: So Meghan, on the sequential softening in Mainland China and Rest of World, how much do you attribute to macro relative to product assortment? And can you elaborate on August trends? Or just what gives you confidence in the third quarter as the trough? Meghan Frank: Yes. So in terms of China, I would say we're really looking at primarily brand noise impacting brand sentiment as well as a softer 618 Tmall event that Andre mentioned. And then we are seeing across the globe, newness not perform at expectations. So I would say macro has been challenging in China for some time. We're not pointing to macro specifically as a key issue. As we look to the second half, I would say our quarter-to-date trend does support how we've looked at the international business towards the back half of the year as well as China. And maybe I'll ask Andre to add a few more details on how we're actioning China in the second half. Andre Maestrini: Yes. In China, we are really focusing on implementing continuous activations of the brand. Just in the upcoming weeks, we'll have new store openings with the associated activations in key location of top Tier 1 cities. We also are conducting a Super Brand Day around our outerwear and Wunder Puff icon, so a big activation there. And also, early October, we are leveraging our leadership in World Mental Health Day activation to keep positioning our brand on wellness. That's the underlying trend there. So all that to counter this initial negative noise that Meghan refer in Q2. Matthew Boss: And Meghan, just as a follow-up on the 12% comp decline in the Americas in the second quarter and the inconsistency that you cited, are there any green shoots that you've seen in August with product newness now restored to your targeted levels? Meghan Frank: Yes. I would say August, as reflected in our guidance, has gotten off to a bit of a slow start. That said, we are seeing some green shoots in product, particularly in our away-from-body assortment, including our Groove Pant, Align Foldover Jogger, new Dance Studio. We're also reordering into some silhouettes of Define. We've got a new Scuba offering that's launched and Steady State that's doing well. So what we've reflected in our guidance is what we're currently seeing in the trend. But we are aggressively, as we've mentioned, reordering into what's working and any upside from that would not be reflected. Operator: The next question comes from Lorraine Hutchinson with Bank of America. Lorraine Maikis: Understanding that most of your leases are signed for this year, as you look out into next year, are you pausing any of your store opening plans for China or store expansions in the U.S. until you can stabilize those businesses? Meghan Frank: Thanks, Lorraine. I would say we're taking a very measured approach to store expansion. So China, I would say we still see tremendous opportunity from a market expansion standpoint there in terms of square footage and store footprint, and we are taking a hard look at that, obviously, given business trends, but taking a long-term view of the opportunity in that market. In North America, as I mentioned, we just have a handful of new store openings this year, half of which are pop-up conversions, where we've really tested that market, and it has productivity that supports a full-time location. And then, in addition to that, we just have a handful of strategic stores where we feel we need a presence in that market, whether that's a new location or a saturation of an existing market that's performing well. I would say we're taking that approach into '27, and we're just taking a hard look at everything, given current performance of business, and we will share more about how we see square footage growth for '27 when we give guidance in March. Operator: The next question comes from Michael Binetti with Evercore. Michael Binetti: Meghan, I think just a quick one on the model, your guidance. I think, if I got my math right, implies a slight improvement in markdowns sequentially from 2Q in each quarter. Are you -- can you just talk us through how you think the seasonal clearance mix will go? Does that roll off by the end of 3Q? And then maybe in China, if we could get a sense of the monthly cadence, given your comments around some of the Tmall event 16 -- 618, sorry. If the macro persists there, or if the brand issues persist there, is the right thing to do for the brand? Or how are you thinking about whether you'd refrain from promoting again as we get into some of those next Tmall windows, like some of the bigger ones in November? Meghan Frank: Thanks, Michael. So in terms of markdowns by quarter, we were up 70 basis points year-over-year in Q2. We're expecting 60 basis point increase in Q3, so a slight moderation. And then we are against -- up against a high water line in Q4. So we're expecting markdowns to be approximately flat in the fourth quarter and then 40 basis points up for the year. So that's the shape of that, and it is based on seasonal clearance of goods that haven't moved during '26. In terms of China, we saw some pressure in May. It subsided to some degree in June, and we also saw more pressure in July. And then I'll ask Andre to just comment on Tmall. Andre Maestrini: Yes. We're definitely with a hyperfocus on regular price increase in China, and I think we had a healthy performance there. So we continue to use Tmall. It's shop-in-shop, and it's not promotion related. When I refer to the Super Brand Day, it's a full price event on our icons, which is the Wunder Puff to launch our outerwear season. And looking for the end of the quarter and beginning Q4, the 11/11 event, we will just participate as normal to anniversary our previous year's business that we've been doing last year. Operator: The next question comes from Paul Lejuez with Citi. Paul Lejuez: Curious, at a high level, if you think you've got a traffic problem that can be solved by increased marketing? Or would you say that you have more of a product problem that requires a little bit more adjustment and time? And how does that answer differ if you think about it region by region? Meghan Frank: Thanks, Paul. I would say, predominantly, we're seeing the pressure in traffic. We're also seeing negative year-over-year conversion, but we're not seeing that worsen. So we've really pointed to 2 opportunities. So one being we've seen some pressure on brand heat and sentiment, and we are investing into marketing, and some of the activations that we've had throughout this summer. And then we've got some things in front of us, including currently we're right now at the U.S. Open with an activation. We've got fall marathon season coming up, New York, Chicago, Toronto. We'll have a presence with those. And then we'll continue some of our social activations through new episodes on our content series there. From a conversion perspective, product, we continue to learn from what's working, not working, reordering aggressively into what is working. And so we're looking to move the needle, I would say, on both fronts with those actions. Paul Lejuez: Was that all comment about the Americas? Or was that -- you talking globally, Meghan? Andre Maestrini: Yes, I can take for China. The main issue was more the event that impacted the brand sentiment. So the focus there is to restore the consideration of the brand at levels that were prior to these events, and that's the main driver to restore traffic -- organic traffic and bring back the demand we've been experiencing. So we'll have the swing there and the additional work on newness in products will also benefit China. But the first reason is the main focus there, definitely. Meghan Frank: I'd say, Paul, the traffic being the biggest driver is across both regions. Paul Lejuez: Got it. And then just market growth by region. How do you view the market that you're playing in, in each region? Meghan Frank: Yes. I would say, the market continues to be competitive across all regions. We really need to be differentiated, offering new innovation. So our actions are geared towards the market we're operating in, in both North America and China, and I would say both competitive markets. Operator: The next question comes from Adrienne Yih with Barclays. Adrienne Yih-Tennant: I guess my first question is, oftentimes when you get into sort of these trends, the first thing you go back to is sort of the customers, what do they want from you? How are they thinking about the brand? So as you do your kind of customer feedback, what are you finding out about the current customer today and what they need from the brand? My second question is, a lot of the fixes that we're talking about today, stores, are sort of at the end of the process, like what do we do about inventory today? Can you talk to us about how you're thinking about the innovation process, the development process, lead times and kind of from the origin, right, what's different about that product development process? Meghan Frank: Thanks, Adrienne. So I would say in terms of guest feedback, we certainly use that to inform our actions. So we have been doing some consumer research, and I would say what we're hearing is they're looking for new and differentiated product from us, innovation. And they are also looking for those community engagements that we offered, and some of the examples that I provided this summer really show some momentum in that engagement, including SeaWheeze, at the level of 10,000 runners -- sorry, 85,000 Strava participants, really some positive momentum in terms of engagement with the brand as well as our summer series. So I would say we are really embedding what we're hearing from our guests into that action plan. And then in terms of our pipeline, we have made some improvements, as we've mentioned, to our go-to-market process to reduce lead times. So that is underway. I think that will continue to improve over time as well as we've really leaned into our chase capabilities. We are reordering into about 20% more than last year. So we've really augmented our capabilities there. And then also from a fast track design perspective, looking to get back into product, with a faster lead time from a design to market perspective as well. So certainly looking at improving that over time. Adrienne Yih-Tennant: Okay. And then my follow-up is, on the marketing, you talked about increasing some marketing investments in the back half of the year. Just wondering, if you don't know that the product is kind of really kind of resonating, are those marketing kind of higher level? Are they more social? Can you talk about like how that return on that advertising spend, how you're considering that going into that period? Meghan Frank: Yes. I would say given the challenges we've seen with -- from both the brand heat and product perspective, we do feel strongly that we need to continue to keep our investment level in marketing. I would say we're looking at more mid-funnel, top-of-funnel activations, community engagement, things such as what I've mentioned in terms of SeaWheeze, summer series, going after fall marathon season, our U.S. Open activation, the content series as well as social. So it's definitely brand building marketing efforts. Operator: The next question comes from Dana Telsey with Telsey Group. Dana Telsey: As you talk about the product and the response to some of the new product that are out there, Meghan, you had mentioned in the prepared remarks a little about adjustments are being made. What are you seeing in response to the new product for men's, women's tops and bottoms? I know you talked about leggings for women's down 20%. What adjustments do you see need to be made? What's the time line of them being made and did pricing factor into any of it? And then I have a follow-up. Meghan Frank: Thanks, Dana. So in terms of what's working today, away-from-body, I mentioned is working, Define, Scuba are working. We did see some positive reception to our golf assortment and some attachment to our ABC Pant. We are experiencing some other new products that are not resonating as well, so we're adjusting to that and reordering what is working. And then we've also seen some decline, greater than we expected in some of our core categories, including leggings that we mentioned. And there, it's also relevant that we're shifting into away-from-body. We've really seen some positive response to that, and the shift has been happening over time but was a little more than we expected in Q2. So we're chasing into that. And overall bottoms trends are down in the mid-single digits. So we're offsetting to a degree, but not entirely. So we're looking to improve our position in away-from-body over time. Dana Telsey: Got it. And then when you think about channels, stores and online, is there at all a difference in the performance of stores and online and traffic patterns to each for the brand? Meghan Frank: I'd say we've overall seen traffic pressure in both channels as well as some conversion pressure in both channels as well. So it's been relatively consistent, I would say, in terms of where we've seen the impact and really connects back to our priorities of getting after brand sentiment with some of the activations we have planned as well as some conversion actions we have, both in product and in improvements we're making there. And then some of the experience pieces that Andre spoke to in terms of store shopability and as well as the e-commerce enhancements we've made to the look and feel of our website. Operator: The last question comes from Mark Altschwager with Baird. Mark Altschwager: Meghan, just one more on the shape of the year for the guide. Just backing into Q4, I think the revenue trends imply pretty similar, but you are baking in less margin pressure. Could you just help bridge that for us? I know you said you expect the promotion piece to get a little bit better, but what are the other factors we should be considering there, like with the cost actions that you outlined and other factors? And then I have a follow-up. Meghan Frank: Yes. Thanks, Mark. Yes. So for Q4, we're expecting around 250 basis points in operating margin pressure. So it is moderated from Q3. We are expecting to see gross margin slightly ahead of last year, and that's really driven by, first of all, we have a higher water line from a revenue perspective in Q4, so less fixed cost deleverage. We also have a tariff benefit. So more of our mitigation actions come into play as we move throughout this year. So we're seeing an accelerating benefit there and essentially flat markdowns and where we've got some pressure in Q2 and Q3. And then from an expense perspective, we will still have deleverage, but it will be much less, I would say, than Q3. Mark Altschwager: Okay. And then on tariffs, the Q says you've paid about $230 million in IEEPA tariffs. You've received $135 million back. I guess, what's the process and the realistic timing on the remainder? And is there a reason you wouldn't ultimately receive the rest back? Meghan Frank: Yes. So we did receive $134 million back in Q2. We have not reflected the remaining $105 million in our forward guidance. There remains some uncertainty in the process that we are actively participating. Operator: That's all the time we have for questions today. Thank you for joining today's call, and have a nice day. Before you buy stock in Lululemon Athletica Inc., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lululemon Athletica Inc. wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $414,015!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,385,459!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 9, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy. Lululemon (LULU) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Ahead of Lululemon's (NASDAQ: LULU) fiscal Q2 earnings report, I wrote an article published on Aug. 26 that said the stock looked like a value trap and that the warning from Dick's Sporting Goods would likely spill over and impact it as well. The stock subsequently plunged 17% on Sept. 4, in the session following its earnings report, as the athleisure company reported disappointing results and cut its full-year outlook. The stock has now lost more than half its value this year and nearly three-quarters of its value over the past five years. Let's dive into the yoga brand's latest results and prospects to see what could come next for the once-high-flying apparel stock. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Unfortunately for Lululemon, cutting guidance has become commonplace. For the fourth time since last June, it slashed its full-year outlook. It now expects revenue to decline by 7% to 5% to between $10.35 billion and $10.5 billion, down from prior expectations for sales in a range of $11 billion to $11.15 billion. Full-year adjusted EPS is projected to be between $9.48 and $9.73, but that includes a $0.86 tariff refund. Earlier, it guided to adjusted EPS of $10.95 to $11.15 without a tariff refund. The company's Q2 results were pretty dreadful, and it looks like things are only worsening. Management noted everything from negative social media commentary to weak responses to new product launches to increased competition and brand deterioration. Overall, the company's Q2 revenue fell 4% year over year to $2.42 billion, missing the $2.46 billion consensus estimate. Adjusted earnings per share (EPS) plunged 34% to $2.01, but were above the $1.79 consensus. The underlying numbers were even worse. Americas revenue sank 8%, while same-store sales plunged 12%. International revenue rose 4%, but only 2% in constant currencies, while comparable sales in constant currencies slipped 6%. China had long been a bright spot for Lululemon, but revenue fell 2% in constant currencies while same-store sales dropped 8% excluding foreign currency movements. The company said it was impacted by negative brand sentiment, which shouldn't be surprising given its big PR gaffe in China when, at an important yoga event held on the Great Wall, it inadvertently gave a Chinese actor a Japanese taiko drum to play instead of a Chinese dagu drum. Rest-of-world sales rose 6% in constant currencies, but comparable-store sales on the same basis dropped 6%. Gross margin decreased by 200 basis points to 60.5%, but it would have been down 360 basis points when excluding the tariff refund. Inventory was basically flat year over year, and it is doing a decent job of keeping this in check. This is an important metric to monitor for struggling brands, as big increases above sales growth can lead to more markdowns and sales. Looking ahead, things will start getting worse for the company just as its new CEO takes over. While it is not uncommon to set a low bar when a new CEO or CFO comes on board, the company still projected a pretty meaningful sales decline. It expects Q3 revenue to decline by 10% to 11% to between $2.290 billion and $2.320 billion. Adjusted EPS is expected to fall to between $0.93 and $0.98 for the quarter, versus $2.59 a year ago. While Lululemon stock looks cheap, now trading at a forward price-to-earnings (P/E) ratio of around 9 times this year's and next year's analyst estimates, the stock looks like it is set to fall into the same trap as other once very popular athletic apparel brands like Nike and Under Armour. The brand has lost its luster and faces increased competition, and, quite frankly, from my viewpoint, the athleisure fashion trend is shifting. I was recently eating lunch at Panera, and nearly everyone was wearing jeans. That is not something you would have seen a few years ago. As such, this is a stock I'd still stay far away from, and it will likely take at least several years for a potential turnaround. Before you buy stock in Lululemon Athletica Inc., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lululemon Athletica Inc. wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 6, 2026. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Lululemon Athletica Inc. and Under Armour. The Motley Fool has a disclosure policy. I Predicted That Lululemon Stock Was In Trouble Ahead of Earnings. What's Next After Its 17% Drop? was originally published by The Motley Fool

In early September 2026, lululemon athletica inc. reported second-quarter results showing year-over-year declines in sales to US$2,415.63 million and net income to US$329.22 million, alongside lower earnings per share. The company also cut its full-year 2026 outlook, now projecting a 5% to 7% revenue decline to about US$10.35–US$10.50 billion, even as gross margin benefited from one-off tariff refunds. We’ll now examine how this weaker guidance and expected 10% to 11% third-quarter revenue decline affects lululemon’s longer-term investment narrative. Uncover the next big thing with 22 elite penny stocks that balance risk and reward. To stay invested in lululemon today, you need to believe the brand can reignite demand in its core North American business while leveraging international and digital strengths to offset slower periods. The latest cut to 2026 guidance and the expected 10% to 11% third quarter revenue decline sharpen the focus on a single near term catalyst: whether the product reset can stabilize U.S. trends. At the same time, it amplifies the key risk that U.S. weakness and tariff pressures become more structural than temporary. In that context, the revised 2026 outlook to US$10.35–US$10.50 billion in revenue, despite a one off boost from tariff refunds, is particularly relevant. It directly tests earlier expectations that cost mitigation and product innovation could cushion the impact of higher tariffs and slowing U.S. sales. If the guidance reset proves conservative and the product refresh gains traction, it could still support the longer term case built around international growth and digital engagement. Yet even if the brand remains strong globally, investors should be aware that U.S. softness and tariff related margin pressure could... Read the full narrative on lululemon athletica (it's free!) lululemon athletica’s narrative projects $12.2 billion revenue and $1.6 billion earnings by 2029. Uncover how lululemon athletica's forecasts yield a $127.73 fair value, a 27% upside to its current price. Before this earnings reset, the most pessimistic analysts were already assuming flat revenues around US$10.9 billion and lower margins by 2029, so if you share their concern about brand fatigue and rising costs, this latest guidance cut may reinforce that more cautious view and prompt you to compare it with more optimistic scenarios. Explore 26 other fair value estimates on lululemon athletica - why the stock might be worth just $107.30! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your lululemon athletica research is our analysis highlighting 3 key rewards that could impact your investment decision. Our free lululemon athletica research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate lululemon athletica's overall financial health at a glance. Opportunities like this don't last. These are today's most promising picks. Check them out now: AI is about to change healthcare. These 37 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Invest in the nuclear renaissance through our list of 91 elite nuclear energy infrastructure plays powering the global AI revolution. We've uncovered the 11 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LULU. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in lululemon athletica inc.? Here are five stocks we like better. Lululemon shares plunged 18% and briefly dipped below $100 after a weak Q2 2026 earnings report erased hopes of a recovery. The earnings beat was largely driven by an 86-cent tariff refund benefit, masking declining revenue and an 8% drop in Americas sales. Management cut full-year guidance for the second time this year, citing persistent weakness in leggings sales, foot traffic, and China growth. For the past two months, investors had begun to whisper that the worst might be over for Lululemon Athletica Inc. (NASDAQ: LULU). The athletic-wear darling had fallen a long way from its peak, but a tentative recovery in the shares was starting to raise hopes that its troubles were finally bottoming out. Unfortunately for the bulls, the release of its Q2 2026 earnings report shattered that illusion. → Revolution Medicines Got Its Breakthrough—What Moves It Next? Shares plunged in Thursday’s after-hours session and were down 18% in Friday's pre-market trading. The stock was trading around $100 before the bell, briefly dipping below $100 for the first time since 2018 and leaving shares roughly 80% below their 2024 peak. → AST SpaceMobile Stock Soared 12%—This Was the Catalyst For a company that was once a stock-market superstar, it marks a stunning fall from grace. If the question going into the earnings report was whether the numbers would justify the recent optimism, then the market's verdict leaves little doubt. This was, by almost any measure, about as bad a report as Lululemon could have delivered, and it vindicated the skeptics who had warned the recovery was built on sand. → Defying Gravity: Space Stocks Reach Escape Velocity At first glance, there was one clear bright spot: Lululemon's $2.92 earnings per share (EPS) comfortably beat analyst expectations of $1.79. But that quickly proved to be false hope. On closer inspection, 86 cents per share came from tariff refunds and associated interest. Excluding that benefit, EPS would have been about $2.06—still above consensus, but considerably less impressive. It was a cosmetic gloss on a fundamentally weak quarter, and once that benefit was stripped away, the picture got bleak quite quickly. Not only did revenue actually contract from a year earlier, but it also missed analyst expectations. Far from painting a picture of a business starting to turn a corner, as the more optimistic bulls had hoped, this report painted one of a business still very much in decline. The heart of Lululemon's problem lies in its home market, where it’s getting worse, not better. In the Americas, once the engine of its phenomenal growth, revenue dropped 8% and underlying sales collapsed by 12%. Management identified several headwinds, including weaker foot traffic, negative chatter on social media, and stumbling product launches, not to mention a painful 20% drop in sales of its signature leggings. That last detail cuts to the core of the worry. When a brand's flagship product falls so sharply out of favor, it hints at something deeper than a passing slump: shoppers have drifted away, and rivals are clearly stealing ground. In the fiercely competitive athleisure market that has already seen the likes of Nike Inc (NYSE: NKE) have their share price decimated, the worry now is whether Lululemon has had its day. For a long time, the bulls had a ready answer to the American malaise: China. International expansion, and the vast Chinese market in particular, was supposed to pick up the slack. Yet this quarter that cushion gave way too, with Chinese revenue growing a meager 4%—and actually declining 2% in constant currency—far too little to offset the weakness back home. The most damning part of the report was not the past quarter but the outlook, which laid bare just how long the road ahead may be. Management sharply cut its full-year guidance for the second time this year, lowering its fiscal year (FY) 2026 revenue outlook to $10.35 billion-$10.50 billion and EPS guidance to $9.48-$9.73. It also expects Q3 revenue to decline 10%-11%. The scale of the guidance cut suggests management expects the current pressures to persist longer than previously anticipated. The market, in taking the shares down so viciously, has obviously taken them at their word. None of this means the situation is beyond redemption. Lululemon’s valuation has now fallen so far that the shares trade at their lowest price-to-earnings ratio on record, and new CEO Heidi O'Neill could breathe fresh life into the company. On paper, at least, a battered brand with a super-recognizable name, a loyal following, and a rock-bottom price does make for an interesting contrarian opportunity. For now, though, the caution is more than justified. The uncomfortable truth is that Lululemon's problems appear structural rather than temporary, with a weakening core market, a faltering international cushion, and no obvious near-term catalyst to turn things around. The tumble below $100 is more than just a symbolic milestone. It reflects a market that has finally accepted that the recovery story from the past few months was premature, and that the hard work of fixing the business has barely begun. There may well be a bargain in Lululemon one day, once a credible turnaround plan is actually in place and delivering. But this week’s report was a stark reminder that catching this falling knife is a dangerous game and will likely remain so for a while yet. The risk remains elevated, and investors still have little evidence that sales trends, product execution, or brand momentum have stabilized. The article "Lululemon’s Earnings Beat Hid a Bigger Problem for Its Turnaround Story" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.