lululemon athletica inc.

What they do

lululemon sells yoga, running and training apparel plus on-the-move apparel and fitness-inspired accessories through company-operated stores, e-commerce and a digital app. It reports three segments: Americas, China Mainland, and Rest of World (APAC and EMEA combined), using an omni-channel model that includes buy online pick up in store, ship-from-store and a single inventory pool. As of August 2, 2026 it operated 825 company-operated stores and had 53 licensed or supply-arrangement retail locations.

Revenue drivers

• Women's apparel — Largest category at 63% of 2025 net revenue; includes pants, shorts, tops and jackets for yoga, running and training.
• Men's apparel — 24% of 2025 net revenue and described in the 10-K as a key pillar of strategic growth plans.
• Accessories and other — 13% of 2025 net revenue; positioned as a way to attract new guests and extend the assortment.
• Americas vs International — Americas remains the largest segment; in Q2 2026 Americas revenue fell 8% while international revenue rose 4%, with China Mainland alone at 174 company-operated stores.

Recent performance

For the second quarter of fiscal 2026 ended August 2, 2026, net revenue fell 4% to $2.4 billion, or 5% in constant dollars, and comparable sales fell 9%. Americas net revenue declined 8% and Americas comparable sales fell 12%, while international net revenue rose 4% but international comparable sales fell 3%. Gross margin rose 200 basis points to 60.5%, including $134.5 million of IEEPA tariff refunds that added 560 basis points; operating margin fell 190 basis points to 18.8% and diluted EPS was $2.92 versus $3.10 a year earlier. The company repurchased 2.7 million shares for $330.0 million and opened nine net new company-operated stores.

Strategy

Management says it is focused on strengthening product offerings, increasing marketing investment and maintaining disciplined expense management. The full-year 2026 outlook was revised down, with revenue now expected to decline 5% to 7%. Interim Co-CEOs Meghan Frank and Andre Maestrini are running the company pending the arrival of incoming CEO Heidi O'Neill, announced in the Q2 2026 release. The company continues to expand internationally, adding nine net new company-operated stores in Q2 2026, and ended the quarter with $1.4 billion in cash and $593.7 million of available revolver capacity.

Risks

• Brand and reputation — The 10-K states the lululemon name is integral to the business and that negative publicity, product quality failures or mishandled recalls could materially harm financial condition.
• Competitive market — The 10-K notes the market for its products is highly competitive and that competition could pressure pricing, margins or market share.
• Americas demand weakness — Q2 2026 Americas comparable sales fell 12% and Americas revenue fell 8%, well below the international performance.
• Foreign currency exposure — Translation gains lifted reported revenue by $69.6 million in the first two quarters of 2026; a 10% U.S. dollar depreciation against hedged currencies would have cut the net fair value of outstanding derivatives by $33.6 million.

Outlook

For Q3 2026, management guides net revenue of $2.290 billion to $2.320 billion, a decline of 10% to 11%, with diluted EPS of $0.93 to $0.98 and a roughly 30% tax rate. For the full year 2026, guidance is net revenue of $10.350 billion to $10.500 billion (a decline of 5% to 7%) and diluted EPS of $9.48 to $9.73. The full-year outlook includes the $0.86 per share from Q2 tariff refunds and associated interest but assumes no further tariff refunds and no future share repurchases.