Investing.com — Lululemon Athletica Inc. (NASDAQ:LULU) reported second-quarter results that topped earnings expectations but missed on revenue, while issuing guidance that fell drastically short of Wall Street estimates, sending shares tumbling 15%.

The athletic apparel retailer posted adjusted earnings per share of $2.92, surpassing the analyst consensus of $1.82 by $1.10. However, revenue declined 4% YoY to $2.4 billion, missing the $2.46 billion estimate. The EPS figure included $0.86 per share from tariff refunds and associated interest. Excluding this one-time benefit, adjusted EPS would have been $2.06. Comparable sales decreased 9%, or 10% on a constant dollar basis, with Americas comparable sales falling 12% and international comparable sales declining 3%.

For the third quarter of fiscal 2026, the company expects revenue of $2.29 billion to $2.32 billion, representing a decline of 10% to 11%. The midpoint of $2.305 billion falls well below the analyst consensus of $2.53 billion. Third quarter EPS is projected at $0.93 to $0.98, compared to the $2.41 consensus. For the full fiscal year 2026, Lululemon now expects revenue of $10.35 billion to $10.5 billion, down 5% to 7%, with the midpoint of $10.425 billion significantly below the $11.03 billion consensus. Full-year EPS guidance of $9.48 to $9.73 also trails the $10.84 estimate.

“While we continue to navigate some challenging dynamics, we are taking a prudent approach with our revised full-year outlook,” said Meghan Frank, Interim Co-CEO and Chief Financial Officer. “Our teams remain focused on accelerating growth by strengthening our product offerings, increasing our marketing investments, and maintaining disciplined expense management.”

Gross margin increased 200 basis points to 60.5%, which included 560 basis points from the tariff refunds. Operating margin decreased 190 basis points to 18.8%.

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