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Executive TL;DR
Lululemon’s fiscal 2026 EPS guidance now sits at $9.48 to $9.73, down from $12.10 to $12.30 in March. That range includes $0.86 of one-time tariff refunds, so the underlying figure is roughly $8.62 to $8.87.
The third quarter is the low point. Revenue is guided down 10% to 11%, operating margin lands near 6.5% versus 17% a year ago, and EPS of $0.93 to $0.98 compares with $2.59.
The Americas drive the damage. Comparable sales fell 12% in Q2 and legging sales dropped about 20%, while China Mainland slowed to a 2% constant-dollar decline after a brand sentiment shock.
The balance sheet carries $1.4 billion of cash and no borrowings, with $713 million left on the buyback authorization. Lease liabilities of $2.14 billion and rising SG&A add fixed cost weight.
Heidi O’Neill became CEO on September 8 and has rebuilt the senior team around product, operations and brand.
About $105 million of IEEPA tariff refunds remain unrecovered and sit outside guidance. After tax that equals roughly $0.65 per share.
Key numbers
FY2025 EPS: $13.26
FY2026 EPS guidance: $9.48 to $9.73 (about $8.62 to $8.87 excluding refunds)
Q3 FY2026 EPS guidance: $0.93 to $0.98 (Q3 FY2025: $2.59)
FY2026 revenue guidance: $10.35B to $10.50B (-5% to -7%)
Cash: $1.39B; borrowings: noneHere’s what you get in this analysis:
Lululemon (LULU) Company Overview
Company Profile at a Glance
Business Model and Revenue Mix
How the Investment Thesis Has Changed
Leadership and Governance Reset
Lululemon Revenue & Financial Analysis
Fiscal 2025 Baseline
Five-Year Growth Deceleration
Q1 and Q2 FY2026 Results
Gross Margin and SG&A Bridge
Balance Sheet, Cash Flow and Buybacks
Store Productivity and the Fixed Cost Problem
Guidance Decoded: What Management Is Telling Investors
Three Cuts in Six Months
Implied Fourth Quarter
What the Q3 Guide Embeds
Earnings Quality After the Tariff Refund
The Turnaround Plan Under Way
Action Plan Pillars
Regional Analysis: North America, China and the Rest of the World
Americas
China Mainland
Rest of the World
Product and Category Analysis
Leggings and the Shift to Looser Fits
Men’s, Accessories and New Product
Tariffs, Sourcing and the Refund Option
Sourcing Footprint
Tariff Timeline and Refund Math
Competitive Position
Risk Register
FY2027 Scenario Modeling
Assumptions
Bear, Base and Bull Cases
Sensitivities and Recovery Math
Signposts That Would Change the Outlook
Catalyst Calendar
Bottom Line for Investors
Latest Analyst Price Targets
Official Sources & Data
Disclaimer: This analysis is for informational & educational purposes only and should not be construed as investment advice. Investors should conduct their own due diligence before making investment decisions. Past performance does not guarantee future results.
Lululemon (LULU) earned $13.26 per share in fiscal 2025. Management now guides fiscal 2026 to $9.48 to $9.73, and the third quarter alone carries a guided EPS decline of roughly 63%.
That decline follows a stretch in which revenue grew at a 19% annual rate from fiscal 2021 to 2024. Revenue is now guided down 5% to 7%, SG&A dollars keep rising, and the company has changed CEOs, settled with its founder and cut guidance twice since March.
The balance sheet buys time: $1.4 billion of cash, no borrowings and a new chief executive with more than 25 years at Nike.
This deep-dive fundamental analysis report rebuilds the guidance math, strips out the one-time tariff refund, maps each region and models fiscal 2027 EPS outcomes so the assumptions that carry the most weight become visible.
The guidance gap in four numbers
FY2025 EPS: $13.26
FY2026 EPS guidance midpoint: $9.61 ($8.75 excluding the refund)
Q3 FY2026 EPS guidance midpoint: $0.955 versus $2.59 a year ago
Q3 FY2026 operating margin guidance: about 6.5% versus 17%
Lululemon (LULU) Company Overview
Company Profile at a Glance
Lululemon sells technical apparel, footwear and accessories for yoga, running, training and most other activities. It controls the guest relationship through a vertical retail strategy built on company-operated stores and e-commerce.
The fleet reached 825 company-operated stores on August 2, 2026. Square footage rose 11% year over year, driven by 41 net new stores added since Q2 of 2025.
Company: lululemon athletica inc.
Ticker: NASDAQ: LULU
Headquarters: Vancouver, British Columbia
Founded: 1998
Fiscal year: ends the Sunday closest to January 31 (FY2026 ends January 31, 2027)
CEO: Heidi O'Neill (started September 8, 2026)
CFO: Meghan Frank
Executive Chair: Marti Morfitt
FY2025 revenue: $11.1B
FY2025 operating margin: 19.9%
FY2025 diluted EPS: $13.26
Company-operated stores (Aug 2, 2026): 825
Cash (Aug 2, 2026): $1.39B
Borrowings: none, with $593.7M of revolver capacity available
Business Model and Revenue Mix
Women’s product made up 63% of fiscal 2025 revenue, men’s 24% and accessories and other 13%. Fiscal 2025 growth ran at 5% for women’s, 4% for men’s and 8% for accessories and other.
Channel mix is balanced. Stores produced $1.19 billion in the first quarter and e-commerce added $997 million, and digital was 39% of Q2 revenue.
Revenue mix, FY2025
Women's: 63%
Men's: 24%
Accessories and other: 13%
Channel snapshot, Q1 FY2026
Company-operated stores: $1,192.8M
E-commerce: $997.4M
Q2 FY2026 category change
Women's: -4%
Men's: -1%
Accessories and other: -13%
How the Investment Thesis Has Changed
The growth plan of the last four years aimed to quadruple international revenue by 2026. International delivered while North America stalled, and the mix flipped from a U.S.-led story to a two-engine story.
That second engine now sputters too. China Mainland grew 30% in Q1 on a reported basis and then slowed to 4% in Q2, which removes the cushion that masked weakness in the Americas.
The thesis today centers on four repairs: full-price selling in North America, brand heat in China, tariff normalization and a product engine that reacts faster. Each repair maps to a line on the income statement, which the sections below measure.
Thesis scorecard as of November 10, 2026
Premium full-price selling: under pressure (Americas comps -12% in Q2)
International growth engine: slowing (China Mainland -2% constant dollar in Q2)
Margin structure: reset lower (FY2026 operating margin guided down about 530 bps)
Balance sheet: strong (no borrowings, $1.4B cash)
Leadership: rebuilt (new CEO, new product, operations, brand and strategy chiefs)
Capital return: buybacks continue, no dividend
Leadership and Governance Reset
The CEO Transition
Calvin McDonald stepped down in January as Americas sales weakened, and CFO Meghan Frank and Chief Commercial Officer André Maestrini ran the company as interim co-CEOs. The board then named Heidi O’Neill on April 22, and she started on September 8.
O’Neill spent more than 25 years at Nike, where she helped build the business from about $9 billion to $45 billion in sales. She has also served on the boards of Spotify, Hyatt and Lithia & Driveway.
Critics point out that she has never held a CEO role and was part of a weaker stretch at Nike. Her first public strategy read has not arrived, and investor enthusiasm may wait for clarity on the plan.
Leadership timeline
Dec 2025: McDonald exit announced (effective Jan 31, 2026); Chip Wilson nominates three directors
Dec 18, 2025: Elliott's $1B+ stake reported
Mar 17, 2026: Chip Bergh added to the board
Apr 22, 2026: Heidi O'Neill named CEO
May 27, 2026: cooperation agreement with Wilson
Jun 25, 2026: annual meeting; two Wilson nominees join the board afterward
Sep 8, 2026: O'Neill starts
Oct 7, 2026: new leadership structure announced
Nov 9, 2026: chief brand officer named; chief strategy officer starts Nov 23
Activist and Founder Pressure
Activist Elliott built a stake above $1 billion in December 2025 and backed former Ralph Lauren executive Jane Nielsen for the CEO job. The board chose O’Neill instead.
Founder Chip Wilson, who owns about 8.7%, forced a proxy contest and then settled for two board seats. Marc Maurer, a former On co-CEO, and Laura Gentile, a former ESPN marketing chief, joined after the June 25 annual meeting.
The deal includes a non-disparagement pledge of about 18 months and a cap on Wilson’s stake. That removes a public critic and a proxy distraction through the 2027 meeting season, although proxy fees still weighed on Q2 SG&A.
Governance snapshot
Largest individual shareholder: Chip Wilson (about 8.7%)
Standstill and non-disparagement: until 30 days before the 2028 nomination deadline
Board additions in 2026: Chip Bergh, Marc Maurer, Laura Gentile
Executive Chair: Marti Morfitt
Activist presence: Elliott (stake reported above $1B in Dec 2025)
The New Executive Bench
On October 7 the company announced a new structure built around product. Athleta CEO Maggie Gauger becomes chief product officer and president, overseeing design, merchandising, footwear and materials science, and Walmart Canada executive Joseph Godsey becomes chief operating officer.
Chief Supply Chain Officer Ted Dagnese and Chief Brand and Product Activation Officer Nikki Neuburger left on November 6.
On November 9 the company named Ben Hallam chief brand officer and Emily Sunderland, from Boston Consulting Group, chief strategy officer effective November 23.
New and changed roles
Chief Product Officer and President: Maggie Gauger (from Athleta; effective Oct 26)
Chief Operating Officer: Joseph Godsey (from Walmart Canada; 15 years at Adidas earlier in career)
Chief Brand Officer: Ben Hallam (from Four Seasons; effective Nov 9)
Chief Strategy Officer: Emily Sunderland (from BCG; effective Nov 23; reports to CFO)
Departed Nov 6: Ted Dagnese (supply chain), Nikki Neuburger (brand and activation)
Lululemon Revenue & Financial Analysis (Latest)
Fiscal 2025 Baseline
Fiscal 2025 revenue rose 5% to $11.1 billion, with international up 22% and the Americas down 1%. Gross margin fell 260 basis points to 56.6% and operating margin fell 380 basis points to 19.9%.
Diluted EPS landed at $13.26 versus $14.64 a year earlier. Inventory ended the year up 18% at $1.7 billion, which set up the markdown pressure that carried into 2026.
FY2025 (ended February 1, 2026)
Revenue: $11.1B (+5%; +7% excluding the 53rd week of FY2024)
Americas revenue: -1%
International revenue: +22%
Gross margin: 56.6% (-260 bps)
Operating income: $2.2B (-12%)
Operating margin: 19.9% (-380 bps)
Diluted EPS: $13.26 (FY2024: $14.64)
Share repurchases: 5.0M shares for $1.2B
Year-end inventory: $1.7B (+18%)
Stores: 811
Five-Year Growth Deceleration
Revenue growth has