Lululemon posted net income of $329.2 million, or $2.92 per share, compared with $370.9 million, or $3.10 per share, a year earlier. Gross profit edged down 1% to $1.5 billion, while reported gross margin rose 5.6%, aided by a $134.5 million tariff refund that the company said boosted results.
For the third fiscal quarter, the retailer expects revenue between $2.29 billion and $2.32 billion, a decline of roughly 10% to 11% year over year, and earnings of $0.93 to $0.98 per share. Full-year net revenue guidance now sits at $10.35 billion to $10.5 billion, a 5% to 7% decline and well below the prior range of $11 billion to $11.15 billion. Full-year earnings are forecast at $9.48 to $9.73 per share, down from an earlier $10.95 to $11.15 range. The company said the new outlook includes a benefit from tariff refunds.
Interim CEO Meghan Frank told analysts the company faced "negative commentary" on social media that hurt performance in the quarter, and that it saw a "greater-than-expected" slowdown in some core categories, including leggings. She acknowledged uneven response to recent product launches but added, "While we are seeing good guest reaction to our activations and some of our newer styles, the overall response to our product launches remains inconsistent, and we've continued to see pressure on the brand in both of our largest markets."
Frank said management will prioritise bringing new styles to market and tightening inventory to restore sales momentum. "We know there is much more work to be done," she said, and added that the company's leaders and staff are focused on "serving our guests and executing initiatives to drive an inflection in our business."
The results arrive as Heidi O'Neill prepares to take over as chief executive next week, handing incoming leadership a narrower runway to reverse the brand's slide. The combination of slowing demand in key categories, uneven product reception, and heightened social-media scrutiny leaves Lululemon with multiple operational and reputational issues to address if it is to meet the trimmed targets and regain investor confidence.
