Lululemon guides FY2026 gross margin to fall about 80 bps from FY2025
AI Market Summary
Lululemon guided FY26 revenue to $10.35–10.5B, down 5%–7% vs FY25, and expects gross margin to fall ~80 bps, citing higher markdowns and fixed-cost deleverage despite a tariff refund benefit. Tariff assumptions remain elevated at 20% after September. The outlook implies ongoing demand softness in North America and continued cost pressure, a near-term negative for apparel retail risk appetite.
Impact level
● Medium
AI InsightAI Insight
▼ Bearish
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Lululemon issued its FY2026 outlook on its second-quarter earnings call, forecasting full-year revenue of $10.35 billion to $10.5 billion, down 5% to 7% versus FY2025. The company expects gross margin to decline by about 80 basis points year over year and said its guidance assumes tariffs of 10% to 12.5% through September and 20% for the rest of the year. For stores, it plans about 35 net new company-operated openings and about 35 optimizations in 2026, supporting roughly 10% total square footage growth.
