Lululemon Q1 Net Income Drops to $195m, Stock Hits 2018 Lows
LULU•Lululemon reported Q1 net revenue of $2.47bn, up 4%, but net income fell to $195m and operating margin narrowed to 11.2%, prompting a 39% year-to-date share drop to its lowest since 2018. The company cut FY26 revenue outlook to $11bn–$11.15bn, while Michael Burry held his stake despite intense competition.
1. Q1 Financial Results
Lululemon posted net revenue of $2.47bn for the quarter ended May 3, a 4% increase year-over-year, while net income declined to $195m from $314.5m. Diluted EPS fell to $1.69 from $2.60, operating income dropped 37% to $276.9m, operating margin narrowed by 730 basis points to 11.2%, and gross profit declined 3% to $1.33bn with a 54.2% gross margin.
2. Guidance and Outlook Adjustments
For Q2 FY26, the company expects revenue of $2.45bn to $2.47bn and diluted EPS of $1.76 to $1.81. Full-year guidance was lowered to $11bn–$11.15bn in revenue and $10.95–$11.15 in diluted EPS, excluding potential tariff refunds and future share buybacks.
3. Market Reaction and Investor Stakes
Lululemon shares plunged over 11% in after-hours trading to the lowest level since 2018, marking a 39.89% decline year-to-date. During the quarter, management repurchased 2.2 million shares for $358.3m, and contrarian investor Michael Burry maintained his position despite criticisms over governance and competition.
4. Global Sales Trends and Store Expansion
Revenue in the Americas fell 3% (4% on a constant-currency basis), while international revenue rose 22% (16% cc). Mainland China sales jumped 30% (23% cc) with comp sales up 20% (13% cc), and rest-of-world revenue grew 13% (9% cc) with comparable sales up 5% (1% cc). The company opened 11 stores, closed six, and ended the quarter with 816 locations worldwide.
