VANCOUVER, British Columbia, September 4, 2026, 11:30 p.m. PDT — Lululemon Athletica Inc. NASDAQ:LULU closed 17.4% lower Friday. A $134.5 million tariff refund had made its latest profit look sturdier than the underlying business.
- Lululemon fell to $100.61 on 37.4 million shares, an eight-year low.
- Reported gross margin was 60.5%; excluding the refund, it was about 54.9%.
- Underlying quarterly EPS was about $2.06, down 33.5% from a year earlier.
- Third-quarter EPS guidance sits roughly 60% below the prevailing analyst estimate.
The refund contributed $0.86 to diluted earnings of $2.92. It supplied almost 30% of reported EPS. Without it, earnings fell by one-third from last year’s $3.10.
That distinction matters for incoming Chief Executive Heidi O’Neill. She starts September 8 with the Americas business shrinking and the share price near its lowest level since 2018.
One session erased the previous seven days of gains
Lululemon closing prices, dollars per share
Prices through the . Source: Nasdaq historical data.
Friday’s volume was 2.2 times Thursday’s level. The drop erased about $2.5 billion of market value and left the shares down roughly 52% this year.
Second-quarter revenue fell 4% to $2.4 billion. Comparable sales dropped 9%, while Americas revenue declined 8%. International revenue rose 4%.
The headline margin told a gentler story. Reported gross margin rose 200 basis points to 60.5%. The tariff refund added 560 basis points.
The refund reversed the apparent margin direction
Reported figures versus TS2 calculations excluding the IEEPA tariff refund
reported54.9%
underlying
The calculated underlying margin was 360 basis points below last year’s 58.5%.
reported$2.06
underlying
The refund and related interest supplied 29.5% of reported quarterly EPS.
Source: Lululemon second-quarter results. Ex-refund figures and percentages calculated by TS2.
The payment came from International Emergency Economic Powers Act tariff refunds and related interest. Lululemon’s outlook includes the $0.86 benefit. It assumes no further refunds.
The next quarter looks weaker. Management expects revenue of $2.29 billion to $2.32 billion and EPS of $0.93 to $0.98.
Those midpoints trail market estimates by about 8.9% and 60.4%, respectively. Full-year revenue guidance now implies a 5% to 7% decline.
The third-quarter earnings gap is the widest
Guidance midpoints compared with prevailing analyst estimates
Sources: company guidance and consensus estimates reported by Investing.com. Midpoints and gaps calculated by TS2.
The operational problem remains concentrated in North America. Comparable sales there fell 12%. International comparable sales decreased 3%, or 6% in constant currency.
Store square footage still grew 11%, according to Reuters. That expansion raises the hurdle for sales density and inventory discipline while demand contracts.
Guggenheim analyst Simeon Siegel called Lululemon “a powerful brand but an overstretched one.” At least 12 brokerages cut price targets after the release, Reuters reported.
The selloff has made the stock cheaper. Its forward earnings multiple fell near 11.5 times. Nike, Inc. NYSE:NKE traded around 20.8 times and adidas AG XETRA:ADS near 13.4 times.
That discount prices in a difficult repair. Lululemon repurchased 2.7 million shares for $330 million during the quarter. Cash stood near $1.4 billion, Reuters reported.
Risks: Fresh products could revive Americas demand faster than expected. Tariff changes may alter costs again. A longer sales decline would pressure margins and turn store growth into a heavier fixed-cost burden.
O’Neill’s first task is measurable. Investors need evidence that product demand is improving before any refund benefit disappears from year-over-year comparisons. The third-quarter report will provide that test.
