Lululemon Athletica Inc. (NASDAQ: LULU) is set to report second-quarter fiscal 2026 results on September 3, after market close, with analysts forecasting top- and bottom-line declines.
The Zacks Consensus Estimate for second-quarter revenues stands at $2.5 billion, reflecting 2.3% growth from the year-ago quarter’s reported figure.
The consensus estimate for second-quarter earnings is pegged at $1.79 per share, suggesting a steep 42.3% decline from the year-ago quarter’s actual result.
Earnings estimates have remained unchanged over the past 30 days, signaling little conviction among analysts that conditions have meaningfully shifted.
LULU carries a trailing four-quarter average earnings surprise of 8.1%, reflecting a generally consistent record of beating expectations in recent periods.
However, the Zacks model does not conclusively predict an earnings beat this quarter, with LULU carrying an Earnings ESP of 0.00% and a Zacks Rank of 3.
The company’s Power of Three X2 growth strategy remains central to its outlook, focusing on product innovation, guest experience and market expansion as the three core pillars.
International markets have been a meaningful bright spot, with management guiding Mainland China to deliver mid- to high-teens growth and Rest of World to record high-single to low-double-digit growth in the second quarter.
Internal model projections anticipate revenues in China Mainland rising 19.5% and Rest of World growing 14.6% in the second quarter of fiscal 2026.
North America, the company’s largest and most mature market, continues to face softness driven by uneven traffic trends and increasingly cautious consumer spending in discretionary categories.
Management previously cited a moderation in sales trends tied to spikes of negative brand commentary and product launches that have not met expectations, adding it is moving with urgency to adjust product and increase marketing and community activations.
For the second quarter, management guided revenues in the range of $2.45 billion to $2.475 billion, implying a 2% to 3% decline, with EPS expected between $1.76 and $1.81, compared to $3.10 in the prior-year quarter.
Gross margin is expected to fall 410 basis points, driven by higher tariff costs, increased markdowns and ongoing investments in store openings, optimizations and the distribution network.
Tariffs alone are projected to represent a 150-basis-point headwind, partially offset by 100 basis points, while markdowns are expected to rise 50 basis points due to additional seasonal clearance activity.
SG&A deleverage is expected to reach 500 basis points in the second quarter, driven by lower sales versus prior expectations, proxy costs, increased marketing and the reintroduction of expenses reduced last year.
Management expects the second-quarter fiscal 2026 operating margin to contract 910 basis points year over year, landing at 11.6%.
LULU shares have lost 11.4% over the past three months, significantly underperforming the industry’s 2.2% gain, the Consumer Discretionary sector’s 2% gain and the S&P 500’s 0.5% gain.
From a valuation standpoint, the stock trades at a forward 12-month price-to-earnings multiple of 10.33x, well below the industry average of 15.05x.
Among peers with more favorable setups, Victoria’s Secret (VSXY) carries an Earnings ESP of +5.20% and a Zacks Rank of 1, with consensus revenue estimates of $1.6 billion representing an 11.2% increase from the prior-year quarter.
Macy’s Inc. (NYSE: M) holds an Earnings ESP of +20.81% and a Zacks Rank of 2, with a trailing four-quarter average earnings surprise of 211%, while NIKE Inc. (NYSE: NKE) carries an Earnings ESP of +0.55% with consensus revenue estimates of $11.5 billion for its first quarter of fiscal 2027.
