VANCOUVER, British Columbia, September 3, 2026, 16:25 PDT — Shares of lululemon athletica inc. NASDAQ:LULU sank 18.50% to $99.2397 in after-hours trading as of 19:22 EDT, after a 9% comparable-sales decline and a second cut to the athletic-apparel seller’s annual outlook.
- Lululemon fell $22.5303 from its $121.77 regular-session close by 19:22 EDT; Nasdaq reported 16.67 million shares of volume.
- Fiscal second-quarter revenue fell 4% to $2.416 billion, with Americas revenue down 8% and total comparable sales down 9%.
- The new $10.35 billion–$10.50 billion annual sales range is $650 million below the midpoint of June guidance.
- A $134.5 million tariff refund added $0.86 to quarterly EPS and 560 basis points to reported gross and operating margins.
The decline erased about $2.44 billion of equity value from the closing price, using the 108.44 million shares outstanding shown by Google Finance on September 3. Turnover reported by Nasdaq was roughly 5.2 times Google Finance’s 3.20 million-share average. The heavy turnover makes a thin after-hours quote an unlikely explanation.
The quarter exposed a demand problem that international expansion could not cover. Revenue missed the $2.46 billion consensus displayed by Google Finance, while adjusted EPS of $2.06 exceeded its $1.80 estimate. The earnings beat came from a much lower base and sat beneath a reported $2.92 GAAP result boosted by a one-time refund.
Investors focused on what followed. Lululemon’s September 3 earnings release projected third-quarter revenue of $2.29 billion to $2.32 billion, down 10% to 11%. Management expects EPS of $0.93 to $0.98, compared with $2.59 a year earlier. The earnings call put the coming quarter’s operating margin near 6.5%, versus 17% last year.
Lululemon’s after-hours reset
Price in U.S. dollars. As of .
Regular close and real-time after-hours quote: Nasdaq. The line joins two observations and does not imply continuous streaming.
The refund complicates the profit comparison. Reported gross margin rose 200 basis points to 60.5%. Yet the refund alone added 560 basis points, implying 54.9% without it. The same arithmetic puts operating margin at about 13.2% before the refund, against 20.7% a year ago. Lululemon’s Form 10-Q provides the underlying figures.
Geography was the larger fault line. Americas revenue fell 8%, including an 8% U.S. decline and an 11% Canadian decline. China Mainland grew 4% in reported dollars but fell 2% in constant currency. Rest-of-world revenue rose 5%. The consolidated total still declined 4%, because the shrinking Americas business remains far larger than the growth markets.
Growth abroad did not offset the Americas
Second-quarter reported revenue change from a year earlier.
Quarter ended August 2, 2026. Source: Lululemon’s SEC-filed earnings release.
The product miss reached Lululemon’s old center of gravity. Interim co-CEO and CFO Meghan Frank said on the earnings call that legging sales fell about 20% in the quarter. Looser “away-from-body” bottoms gained traction, but did not fill the hole. Women’s revenue fell 4%, men’s fell about 1%, and accessories and other revenue dropped 13%.
Weakness crossed channels. Store sales fell 6%, while digital revenue declined 6% to about $900 million, or 39% of quarterly revenue. Lululemon ended the period with 825 stores and 11% more square footage than a year earlier. Management trimmed its 2026 net-opening plan to about 35 stores from 40, even as fixed store and distribution costs press margins.
The balance sheet leaves room to work, but capital allocation now faces scrutiny. Cash stood at $1.39 billion on August 2, with $593.7 million available under the revolving facility. Lululemon spent $330 million repurchasing 2.7 million shares during the quarter. Its after-hours price was about 17% below the roughly $120 average purchase price cited on the call.
The June-to-September guide change is severe. The revenue midpoint fell to $10.425 billion from $11.075 billion. The EPS midpoint fell 13.1% to $9.605 from $11.05, even though the new range includes the $0.86 tariff benefit already booked. Annual operating margin is expected to contract about 530 basis points, including a 130-basis-point lift from the refund.
Fiscal 2026 guidance reset
Midpoints calculated from company ranges. The September EPS range includes $0.86 from the tariff refund. Sources: Lululemon’s June 4 release and September 3 release.
Valuation was already a dispute before the report. Google Finance showed no buys, 19 holds and three sells among 22 ratings issued during the prior three months, with targets from $88 to $154. The average was $122. Those targets predate the new guidance in most cases. At $99.2397 after hours, the stock traded at roughly 10.3 times the midpoint of reported EPS guidance, or about 11.3 times after mechanically removing the $0.86 refund.
Management’s diagnosis has two parts. Frank told Citi analyst Paul Lejuez that “predominantly we’re seeing the pressure in traffic,” while also acknowledging negative conversion. The company plans more marketing, fewer store SKUs and faster reorders of styles that sell. Incoming CEO Heidi O’Neill starts the week of September 7 and will review the strategy and action plan.
Risks: A recovery in looser women’s bottoms, stronger holiday traffic or further tariff recoveries could make the reset too pessimistic. The company has not included another $105 million of potential tariff refunds in guidance. The downside is that slow traffic, higher markdowns and fixed-cost deleverage persist while Lululemon keeps spending on marketing, stores and a distribution-center project.
The next test is the third quarter now under way. Management said August started slowly and expects North American revenue to fall in the mid-teens. Investors will watch whether full-price sales improve before seasonal clearance reaches the income statement. At present, the share-price move says the market does not view the latest forecast as a clean floor.
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