TLDR
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LULU drops after revenue growth fails to offset weak margins
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Lululemon cuts 2026 outlook as Americas sales soften further
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LULU slides overnight as earnings fall and guidance weakens
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Lululemon reports revenue growth but margin pressure hits stock
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LULU selloff deepens after weaker profit and lower 2026 forecast
Lululemon (LULU) shares fell sharply after the company reported higher first-quarter revenue but weaker margins and reduced full-year guidance. LULU closed at $124.92, down 0.88%, before dropping overnight to $110.82, down 11.29%. The selloff followed weaker profitability, soft Americas sales, and a lower 2026 outlook.
Lululemon Athletica Inc., LULU
Lululemon Revenue Rises as Americas Sales Weaken
Lululemon reported first-quarter fiscal 2026 revenue of $2.5 billion, marking a 4% increase from last year. However, revenue rose only 2% on a constant dollar basis. The result showed growth, but it also reflected uneven demand across key regions.
The Americas remained the weakest part of the business during the quarter. Americas net revenue fell 3%, while constant dollar revenue dropped 4%. Besides, Americas comparable sales declined 5%, or 6% on a constant dollar basis.
International sales helped offset the weaker North American performance. International net revenue increased 22%, while constant dollar revenue rose 16%. International comparable sales advanced 13%, showing stronger demand outside the Americas.
Margins Decline as Earnings Fall
Lululemon’s profitability weakened during the first quarter despite higher revenue. Gross profit fell 3% to $1.3 billion, while gross margin dropped 410 basis points to 54.2%. Hence, cost pressure and weaker sales mix weighed on the company’s operating performance.
Income from operations declined 37% to $276.9 million during the quarter. Operating margin also fell 730 basis points to 11.2%. Consequently, diluted earnings per share dropped to $1.69 from $2.60 a year earlier.
The company continued shareholder returns despite lower earnings. Lululemon repurchased 2.2 million shares for $358.3 million during the quarter. Additionally, it opened five net new company-operated stores and ended the period with 816 stores.
Lululemon Cuts 2026 Outlook After Headwinds
Lululemon ended the quarter with $1.5 billion in cash and cash equivalents. It also had $593.6 million available under its committed revolving credit facility. Meanwhile, inventories increased 2% to $1.7 billion, although unit inventories declined 4%.
For the second quarter, Lululemon expects revenue between $2.450 billion and $2.475 billion. That range represents a decline of 3% to 2%. The company also expects diluted earnings per share between $1.76 and $1.81.
For fiscal 2026, Lululemon now expects revenue between $11.000 billion and $11.150 billion. That outlook points to a decline of 1% to flat growth. Therefore, the weaker guidance reinforced market concern over margins, tariffs, macro pressure, and slower Americas momentum.
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