$2.4 billion in quarterly revenue, down 4% year over year, arrived with Lululemon Athletica's (NASDAQ: LULU) second full-year guidance cut of fiscal 2026 on September 3. Comparable sales fell 10% on a constant-currency basis. Management now projects full-year revenue of $10.35 billion to $10.5 billion, a 5% to 7% annual decline, and guides full-year earnings per share to $9.48 to $9.73, against $13.26 recorded in the prior fiscal year.
| Metric | Figure | Label |
|---|---|---|
| Quarterly revenue | $2.4B | Reported, -4% YoY |
| Comparable sales | -10% cc | Reported |
| North America revenue | -8% | Reported |
| Canada | -11% | Reported |
| China Mainland (cc basis) | -2% | Reported |
| Rest of World | +5% | Reported |
| Leggings | ~-20% | Reported, approx. |
| Accessories | -13% | Reported |
| Q3 operating margin | ~6.5% | Projected, vs. 17% prior year |
| Full-year revenue | $10.35B-$10.5B | Projected, -5% to -7% |
| Full-year EPS | $9.48-$9.73 | Projected, vs. $13.26 prior year |
| Net new stores | ~35 | Projected, vs. prior target of 40 |
Category and geography
The core is the problem. Leggings, still the brand's most important category, fell roughly 20% as consumers rotate toward looser silhouettes, a shift Lululemon has not yet fully offset. Accessories dropped 13% as bag demand softened. Management said the response to new North American product launches remains inconsistent heading into the third quarter, with Canada down 11% on a reported basis.
China Mainland tells a separate story. Revenue there grew 4% on a reported basis but contracted 2% in constant currency, hurt by a burst of negative commentary across Chinese media and social platforms following a marketing event at the Great Wall of China. Tmall ran its 618 promotion differently than the prior year, and Lululemon skipped the promotions that followed, compounding the drag on digital sales.
Third-quarter operating margin is projected at roughly 6.5%, approximately 1,050 basis points below the 17% posted a year earlier, as marketing spending rises and fixed costs go unabsorbed.
Flow and positioning
Hedge fund holders declined from 61 to 51 in the most recent quarter. Short interest stands at 12.78% of the float. The forward price-to-earnings ratio was 9.46 as of September 11, a multiple that embeds a substantial amount of the deterioration.
Against that, chase volume, Lululemon's supply chain capability for quickly reordering fast-moving styles, grew roughly 20% year over year. Away-from-body categories including the Groove Wide-Leg, Align Foldover Jogger, Breezily, and the updated Dance Studio Pant are gaining traction, with management projecting momentum to carry through 2026 and into 2027. Rest of World grew 5% on a reported basis, with South Korea marking a decade in the market and a new flagship opening in Tokyo's Harajuku district. The August SeaWheeze Half Marathon drew nearly 10,000 runners from 24 countries and more than 85,000 Strava participants from 120 countries.
Heidi O'Neill was set to begin as chief executive the week after September 3. She inherits a brand that can still fill a marathon start line; full-year EPS is projected at $9.48 to $9.73.