Q1 FY2026 Earnings — Reported June 4, 2026 · Quarter Ended May 3, 2026 · Stock −11% After Hours
Revenue +4% to $2.47B · EPS $1.69 Meets Est. · FY Guidance Cut to Decline · North America −HSD
lululemon beat Q1 revenue estimates by $60M and met EPS expectations, but slashed full-year guidance from $11.35–11.50B to $11.00–11.15B — implying a 0–1% revenue decline for FY2026. Q2 EPS guidance of $1.76–1.81 was $0.87–0.92 below the $2.68 consensus. Gross margin fell 410bps to 54.2%, with 280bps of tariff impact and 140bps of fixed cost deleverage. North America revenue declined on negative brand commentary and product underperformance. China remained the only bright spot with robust growth. Stock fell 11% after hours. P/E of only 9.4x reflects the severity of the market's repricing.
Key Metrics — Q1 FY2026 Actuals (Official 8-K SEC Filing · Quarter Ended May 3, 2026)
Net Revenue
$2.472B
+4% YoY (+2% CC)
Comparable Sales Growth
+1%
−2% constant currency
Gross Margin
54.2%
−410bps YoY
Operating Income
$276.9M
11.2% op. margin
GAAP Net Income
$195M
vs $314.6M Q1 2025
Diluted EPS
$1.69
vs $2.60 Q1 2025 (−35%)
Revenue Beat
+$60M
$2.47B vs $2.43B consensus · +2.5%
FY2026 Revenue Cut
−$350M
$11.0–11.15B vs prior $11.35–11.50B
Tariff Gross Margin Impact
−280bps
Of −410bps total gross margin compression
P/E Ratio (TTM)
9.4x
Near 52-week low · $14.3B market cap
Beat / Miss Matrix
Q1 Beats vs. Consensus
RevenueEst. $2.433B$2.472B (+2.5%)
Diluted EPSEst. $1.68$1.69 (+$0.01)
Full-Price Sales Trend—Sequential improvement QoQ
China Growth—Robust growth · bright spot
International (ex-N.America)—Continued positive momentum
Stock (initial AH)—+2.2% initially · before guidance
Guidance Cuts & Concerns
Q2 EPS GuidanceEst. $2.68$1.76–1.81 (−34% vs est.)
Q2 Revenue GuidanceEst. $2.60B$2.45–2.48B (−5% vs est.)
FY2026 RevenuePrior $11.35–11.50B$11.00–11.15B (decline guided)
FY2026 EPSPrior $12.10–12.30$10.95–11.15 (−$1.15 cut)
North America Revenue—Declined · HSD decline FY guided
Gross MarginQ1 2025: 58.3%54.2% (−410bps YoY)
P&L Summary — Q1 FY2026 vs Q1 FY2025 (Official 8-K SEC Filing)
Select Financial Results — 13 Weeks Ended May 3, 2026
Net Revenue$2,471.6M$2,368.6M+4.3%
North America RevenueDeclined YoY—HSD decline FY guided
International RevenueGrowing—China robust
Comparable Sales Growth+1% reported—−2% CC
Gross Profit$1,339M~$1,381M−3%
Gross Margin54.2%58.3%−410bps
Tariff impact on gross margin−280bps—Structural headwind
Fixed cost deleverage−140bps—Lower sales base
Income from Operations$276.9M—11.2% margin
GAAP Net Income$195.0M$314.6M−38%
Diluted EPS$1.69$2.60−35%
Regional Performance & Management Quote
North America
Q1 North America RevenueDeclined YoY
FY2026 North America guidanceHigh single-digit decline
U.S. vs Canada outlookU.S. "slightly lower" than Canada
Full-price sales trendSequential improvement in Q1
Traffic headwindsNegative brand commentary
Product launchesCertain launches underperformed
Founder proxy contest impactChip Wilson · discrete costs in Q2
International & Store Expansion
China RevenueRobust growth · key positive
International overallContinued positive momentum
Net new store openings 2026Low end of 40–45 range
Store openings mixMajority in China
Global sq. footage growthLow double digits
Tariff mitigation strategySupply chain diversification
Potential tariff refundsNot in guidance — upside optionality
"We experienced a solid start to 2026 as our teams executed with speed, agility, and discipline. Our work to drive improvements in North America resulted in some positive signals in the quarter, including a sequential improvement in full-price sales. More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year. We faced a few headwinds and a moderating sales trend, including negative brand commentary impacting traffic and underperformance of certain product launches. Our gross margin was impacted by tariffs and fixed cost deleverage on lower-than-expected sales."
Meghan Frank, Interim Co-CEO & CFO · Q1 FY2026 Earnings Call, June 4, 2026
FY2026 & Q2 Guidance — Significantly Lowered June 4, 2026
Updated Full-Year & Q2 FY2026 Guidance
FY2026 Revenue (New)
$11.0–11.15B
0% to −1% YoY
FY2026 Revenue (Prior)
$11.35–11.50B
Cut −$350M
FY2026 Diluted EPS (New)
$10.95–11.15
vs prior $12.10–12.30
FY North America Revenue
−HSD decline
Core region contracting
Q2 Revenue Guidance
$2.45–2.48B
vs $2.60B est.
Q2 EPS Guidance
$1.76–1.81
vs $2.68 est.
Q2 Operating Margin
~11.6%
vs 20.7% Q2 2025
Potential tariff refunds
Not in guide ✓
Upside if resolved
Positives & Concerns
Positives
▲Q1 revenue of $2.47B beat the $2.43B consensus by $60M — and Q1 EPS of $1.69 met the $1.68 estimate. After multiple consecutive guidance cuts, the ability to beat even lowered estimates in Q1 represents the minimum threshold for rebuilding investor confidence in near-term guidance reliability.
▲Full-price sales showed sequential improvement versus Q4 FY2025 — the first positive signal in the promotional cycle that has been eroding margins. This is an early indicator that inventory management and pricing discipline are beginning to work, which is a prerequisite for gross margin recovery.
▲China continues to deliver robust revenue growth — the one geographic bright spot in an otherwise challenging global picture. Management is directing the majority of new store openings toward China, demonstrating conviction in the international growth opportunity outside of North America.
▲At a P/E of 9.4x and a market cap of ~$14.3B against a brand with $11B+ in annual revenue, a 54%+ gross margin structure (even compressed), and a global athletic apparel presence, the valuation discount is historically extreme. InvestingPro rates LULU as significantly undervalued at current levels.
▲Potential tariff refunds are explicitly excluded from guidance — representing unquantified upside optionality. Any resolution of the tariff situation or trade agreement that reduces the 280bps gross margin headwind would immediately flow through to earnings given lululemon's high gross margin operating model.
Concerns
▼Full-year 2026 revenue guidance cut to $11.00–11.15B — implying a 0–1% decline — and EPS guidance cut by more than $1.15 per share from $12.10–12.30 to $10.95–11.15. This is the third significant guidance reduction in consecutive quarters and signals management has lost confidence in visibility into North American demand.
▼Q2 EPS guidance of $1.76–1.81 is $0.87–0.92 below the $2.68 consensus — a 32–34% shortfall. Q2 operating margin guided at 11.6% versus 20.7% a year ago represents a 910bps collapse in a single quarter. The magnitude of Q2 guidance cuts after a Q1 beat suggests fundamental demand deterioration is accelerating, not stabilizing.
▼Gross margin fell 410bps to 54.2% — with 280bps from tariffs and 140bps from fixed cost deleverage. Neither driver resolves quickly: tariff exposure is a function of supply chain geography (multi-year to shift), and fixed cost deleverage worsens further in Q2 as revenue is guided to decline. Full gross margin recovery is a multi-year prospect.
▼Negative brand commentary is explicitly cited as a driver of traffic declines in North America. The public feud with founder Chip Wilson — though an agreement to end the dispute was reached June 1 — created reputational overhang at a critical time for brand perception. The proxy contest adds discrete costs to Q2 guidance.
▼North America revenue is now expected to decline in the high single digits for full-year FY2026 — with the U.S. performing slightly worse than Canada. For a company that historically grew North America revenue at 10–20% annually, this structural reversal is an unprecedented deterioration that raises questions about long-term brand positioning in the core market.
Analyst Coverage — Post Q1 FY2026
Wall Street Ratings — Post June 4, 2026
| Firm / Metric | View | Note |
|---|
| InvestingPro | Significantly Undervalued | P/E 9.4x · Fair Value above $128 · 52-wk low $116.62 |
| Market concern | Bearish on guidance | Q2 EPS −34% below est. · FY revenue decline · stock −11% AH |
| Bull case | Value re-entry | $11B revenue, 54% gross margin at 9x P/E — deep value if N. America stabilizes |
| Bear case | Brand erosion risk | Negative brand commentary + founder feud + tariffs = multi-year margin headwind |
| FY2026 EPS Consensus (pre-report) | $12.30 | Vs new management guide $10.95–11.15 · Street will cut significantly |
| Stock (June 4, AH) | ~$116–119 | −11% AH · −40% YTD · near 52-wk low $116.62 · P/E 9.4x |
Earnings Verdict
Q1 Beat Overwhelmed by Guidance Collapse — North America in Structural Decline
lululemon's Q1 FY2026 presents an almost perfect illustration of how a quarterly beat can be completely irrelevant when full-year guidance tells a different story. The $60M revenue beat and $0.01 EPS beat were instantly overshadowed by one of the most dramatic guidance reductions in the company's public history: FY revenue cut by $350M to imply a 0–1% decline, FY EPS cut by over $1.15 per share, Q2 EPS guidance 34% below consensus, and Q2 operating margin guided to collapse from 20.7% to 11.6%. North America — historically the engine of the business — is now guided to decline in the high single digits for the full year. Three structural forces are colliding simultaneously: tariffs compressing gross margin by 280bps with no near-term resolution, negative brand commentary in North America suppressing traffic, and certain product launches failing to resonate. China is the one genuine positive. At ~$116–119 and a P/E of 9.4x, the stock is pricing in sustained deterioration. The investment case requires belief that North America demand stabilizes, tariff relief materializes, and the brand recovers under new leadership. None of these are certain. The founder feud resolution on June 1 removes one overhang. The next critical data point is Q2 — if revenue comes in even slightly above the $2.45–2.48B guide, the narrative may begin to shift. Next earnings September 2026.
Gross Margin
54.2% −410bps
FY Rev. Guide
$11.0–11.15B