LULU 8-K: Smart Summary

lululemon athletica inc. reported Q1 fiscal 2026 results for the quarter ended May 3, 2026, with net revenue increasing 4% to $2.5B but net income declining 38% to $195M. Diluted EPS fell to $1.69 from $2.60 in the prior-year period. The Company also updated its full-year 2026 outlook, now projecting a decline of 1% to 0% in net revenue.

• Net revenue increased 4% to $2.5B (increased 2% on a constant dollar basis) vs. $2.4B in Q1 2025
• Gross profit decreased 3% to $1.3B; gross margin decreased 410 basis points to 54.2% from 58.3%
• Income from operations decreased 37% to $276.9M; operating margin decreased 730 basis points to 11.2% from 18.5%
• Net income decreased to $195M from $314.6M in Q1 2025 (YoY decline of ~38%)
• Diluted EPS of $1.69 vs. $2.60 in Q1 2025
• Effective income tax rate was 31.8% in Q1 2026 vs. 30.2% in Q1 2025
• Cash flow from operations: net cash provided of $214.4M in Q1 2026 vs. net cash used of ($119M) in Q1 2025
• Comparable sales increased 1% (decreased 2% on a constant dollar basis)

• Americas net revenue decreased 3%, or 4% on a constant dollar basis
• Americas comparable sales decreased 5%, or 6% on a constant dollar basis
• United States net revenue change: (4)% reported, (4)% on a constant dollar basis
• Canada net revenue change: (3)% reported, (6)% on a constant dollar basis
• International net revenue increased 22%, or 16% on a constant dollar basis
• International comparable sales increased 13%, or 8% on a constant dollar basis
• China Mainland net revenue increased 30% reported, 23% on a constant dollar basis; comparable sales +20% reported, +13% constant dollar
• Rest of World net revenue increased 13% reported, 9% on a constant dollar basis; comparable sales +5% reported, +1% constant dollar

• The Company repurchased 2.2 million shares for a cost of $358.3M during Q1 2026
• Cash and cash equivalents at end of Q1 2026: $1.5B vs. $1.8B at February 1, 2026 and $1.3B at May 4, 2025
• Available capacity under committed revolving credit facility: $593.6M
• Inventories increased 2% to $1.7B vs. Q1 2025; on a unit basis, inventories decreased 4%
• Net cash used in financing activities: ($378.5M) in Q1 2026 vs. ($468M) in Q1 2025

• Meghan Frank, Interim Co-CEO and CFO: "We experienced a solid start to 2026 as our teams executed with speed, agility, and discipline. Our work to drive improvements in North America resulted in some positive signals in the quarter, including a sequential improvement in full-price sales. More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year."
• André Maestrini, Interim Co-CEO, President, and Chief Commercial Officer: "During the quarter, we continued to grow our lululemon community as we entered new markets and elevated our product, brand, and guest experiences around the world. We recognize that we have more work to do, and our teams remain focused on our priorities as we continue our efforts to reignite growth and realize lululemon's full potential."

• Q2 2026: net revenue expected in the range of $2.5B to $2.5B, representing a decline of 3% to 2%
• Q2 2026: diluted EPS expected in the range of $1.76 to $1.81; assumes a tax rate of approximately 30%
• Full year 2026: net revenue now expected in the range of $11B to $11.2B, representing a decline of 1% to 0%
• Full year 2026: diluted EPS now expected in the range of $10.95 to $11.15; assumes a tax rate of approximately 30%
• Guidance does not reflect any potential IEEPA tariff refunds or future share repurchases