lululemon athletica inc. (LULU)
FY26 guidance cut twice in six months; excluding $0.86 of tariff refunds the EPS midpoint is $8.74, -28.3% from March
2 min preview · 2026-09-25
Executive summary
Lululemon closed at $101.64 on 24 September 2026, -16.5% from the 3 September close and +5.9% from the 52-week low, after cutting its fiscal 2026 outlook twice since setting it in March: by 9.4% in June and a further 13.0% in September, on revenue guidance that moved from growth to a 5% to 7% decline.
The reported numbers understate the deterioration. The September range carries $0.86 per share of tariff refunds that the March and June ranges did not contain, so the like-for-like midpoint is $8.74 rather than $9.61. The same refund lifted reported Q2 gross margin to 60.5%; on the company's own attribution the underlying figure was 54.9%. Both restatements are arithmetic on stated company figures and are tabulated in Exhibit 3 and Exhibit 4.
Two things frame the next quarter. First, the range was set by the interim co-chief executives days before Heidi O'Neill started as CEO on 8 September 2026; new leadership commonly re-bases, so the range should be read as provisional. Second, the company's record cuts the other way: FY25 guidance was raised in December and the year still finished above the raised range, and the last four quarterly EPS guides were each beaten, and the two facts sit in the same twelve months.
- Three guidance revisions, one direction. FY26 diluted EPS guidance moved from $12.10 to $12.30 on 17 March, to $10.95 to $11.15 on 4 June, to $9.48 to $9.73 on 3 September.
- The September range is not comparable with the earlier two. It includes $0.86 per share of tariff refunds and interest booked in Q2; the earlier ranges contained no such item.
- Q2 margins were weaker than reported. Gross margin rose 200bp to 60.5%, but the company attributes 560bp to the refund: underlying gross margin was 54.9%, down 360bp, and underlying operating margin 13.2%, down 750bp.
- The refund does not soften the second half. H1 EPS of $4.61 includes it, and so does the full-year range, so the implied Q4 of $3.94 to $4.14 is unchanged whether or not it is stripped out; against Q4 FY25's $5.01 that is -21% to -17%.
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- The FY26 outlook, revision by revision
- Q2 FY26 in detail, with the refund stripped out
- The refund: mechanics, legal basis, and what is still unclaimed
- Where the decline sits: segments in dollars
- Cash, buyback and stores
- Track record: how the last year of guides resolved