Canadian sportswear brand Lululemon Athletica Inc. (Lululemon) has reported its financial results for the first quarter of fiscal 2026. The reporting period ended on June 4, 2026. The figures show steady international growth while at the same time weakening in the domestic market.
According to the official press release, total net sales reached $2.47 billion during the reporting period. This represents an increase of four percent compared to $2.37 billion in the first quarter of fiscal 2025. On a constant currency basis, net sales increased two percent.
The company experienced different developments in different geographical regions. In America, net sales fell by three percent, or four percent after adjusting for currency effects. International net sales, however, grew by 22 percent. On a currency-adjusted basis, the increase was 16 percent, underlining the robust demand in overseas markets.
Comparable sales and margin declines
Total comparable sales, which include both company-owned retail locations and e-commerce, increased one percent in the quarter. However, on a currency-adjusted basis they fell by two percent.
Domestic distribution channels remained under pressure. Comparable sales in America fell by five percent, or six percent after adjusting for currency effects. International comparable sales partially offset this development and increased by 13 percent, or eight percent after adjusting for currency effects. In the international segment, mainland China achieved a 20 percent increase in comparable sales.
Gross profit fell 3 percent to $1.34 billion from $1.38 billion in the same period last year. The gross margin fell accordingly by 410 basis points to 54.2 percent.
Net income was $195.05 million. This represents diluted earnings per share (EPS) of $1.69. This represents a significant decrease compared to the same period last year, when net income was $314.57 million, or $2.60 per diluted share.
Product updates and strategic agility
The financial update coincides with organizational adjustments following leadership changes. Meghan Frank, Lululemon’s interim co-chief executive officer (CEO) and chief financial officer (CFO), said that while the team acted quickly, the company is currently facing headwinds, which have led to adjustments to its full-year guidance.
Frank explained during the investor conference that waves of negative media coverage, as well as social media comments about product compositions and proxy disputes, have impacted customer traffic. This particularly affected China and the USA.
Additionally, Frank acknowledged that certain product launches had not met expectations. In order to counteract these developments, the brand is accelerating its adjustment capacities by 20 percent compared to the previous year. This allows it to respond more quickly to consumer requests. The product focus is shifting to outerwear and loungewear fabrics.
André Maestrini, Interim Co-CEO, President and Chief Commercial Officer, reiterated that the teams remain focused on core priorities to restart growth. The focus is on successful product capsules in the areas of training, tennis and running.
Inventory control and branch network development
Lululemon ended the first quarter of 2026 with cash and cash equivalents of $1.51 billion. In addition, the Company had $593.60 million of available capacity under its revolving credit facility.
Total quarter-end inventories increased two percent from the first quarter of 2025 to $1.69 billion. However, on a unit basis, inventories fell by four percent. This indicates healthier inventory management and lower volume risk.
During the reporting period, the company used $358.30 million to repurchase 2.20 million of its own shares.
The activewear retailer continued to expand its physical footprint. Five net new company-owned locations opened during the quarter, increasing the global store count to 816 stores.
Updated financial outlook
For the second quarter of fiscal 2026, Lululemon forecasts net sales between $2.45 billion and $2.48 billion. This corresponds to a decrease of two to three percent. Diluted earnings per share are expected to be between $1.76 and $1.81.
The company lowered its forecast for the entire 2026 financial year. It now expects net sales to be between $11.00 billion and $11.15 billion. This represents a stagnation to a decline of one percent compared to fiscal year 2025. Diluted earnings per share for the full year are expected to be between $10.95 and $11.15.
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