NEW YORK, August 29, 2026, 13:18 (EDT). Lululemon’s stock climbed 5.1% as investors reacted to fresh earnings, but focus remained on a 410-basis-point drop in margins.
- Lululemon ended Friday at $120.81, rising 5.05%, and increasing its market capitalization by roughly $660 million.
- Second-quarter earnings are scheduled for release after the close on September 3, with company guidance pointing to $1.79 per share.
- Gross margin in the first quarter dropped by 410 basis points to 54.2%, with recovery remaining dependent on execution.
Lululemon Athletica Inc. NASDAQ: LULU rose 5.05% on Friday, closing at $120.81. The increase lifted its market capitalization by about $660 million, according to Yahoo Finance’s closing figure of $13.72 billion Yahoo Finance.
The recovery is significant as it occurred ahead of a key event. Lululemon is set to release its fiscal second-quarter earnings on September 3, following the close of U.S. markets company announcement.
Friday’s advance surpassed a 0.52% drop in the Nasdaq Composite. Trading volume hit 3.92 million shares, roughly 15% higher than the 65-day average.
| Investor test | Verified figure | Read-through |
|---|---|---|
| Friday’s finish | $120.81, +5.05% | Roughly $660 million in gains |
| Q2 EPS forecast | $1.76-$1.81 | Midpoint stands at $1.785 |
| Q2 EPS market expectation | $1.79 | Nearly in line with midpoint of outlook |
| Full-year 2026 EPS projection | $10.95-$11.15 | Midpoint P/E at 10.9x |
| Average analyst price goal | $121.10 | Limited potential upside over Friday’s finish |
The current valuation offers limited gap between the share price and consensus estimates. According to FactSet, the average price target stands at $121.10, with the median also at $120 WSJ market data.
Analysts are still cautious. The count now stands at three Buy recommendations, one Overweight, 27 Holds, and four Sells.
The issue is with margins rather than balance sheet pressure. Revenue for the first quarter increased by 4% to $2.5 billion, while gross margin dropped by 410 basis points to 54.2% first-quarter results.
Operating income dropped 37% to $276.9 million. Diluted earnings decreased to $1.69 from $2.60.
Growth varied by region. Revenue in the Americas dropped 3%, whereas international revenue rose 22%.
Management forecast second-quarter revenue between $2.45 billion and $2.475 billion, indicating a drop of 2%-3%, even with Friday’s robust performance in the stock market.
The company reported holding $1.5 billion in cash at the end of the quarter. It bought back $358.3 million worth of shares over the period, providing support while not resolving demand for merchandise.
Heidi O’Neill will take over as chief executive in September. Investors are monitoring if the management team can steady full-price sales in North America and manage tariffs ahead of her transition.
Retail earnings set a higher bar after Gap posted a 10% increase in comparable sales at its flagship brand, although Athleta saw a 12% decline in comparable sales Reuters.
Risks: A softer product range, increased discounting, or heightened tariff expenses could offset Friday’s gains. Strong full-price sales or solid yearly guidance would help justify the 10.9-times guided earnings multiple.
The next scheduled catalyst is the September 3 report. The critical figure is not the earnings surprise, but whether the 410-basis-point decline in margin starts to ease.
