LULULEMON Athletica Inc. expects North American sales to fall by a mid-teens percentage in the third quarter of 2026, with weakness concentrated in the U.S. while Canada declines at a slower pace.
Overall Q3 revenue will drop 10 to 11 percent year-over-year, landing between $2.29 billion and $2.32 billion. The company has also weakened its full-year 2026 outlook, now projecting high-single-digit total sales declines and North American revenue down 1 to 3 percent for the year.
Management attributed the shortfall to negative media coverage and disappointing product launches that have eroded consumer demand. Gross margin faces additional headwinds from tariffs and markdowns, which will compress profitability by approximately 410 basis points in Q3.
International markets offer modest relief. China Mainland and the Rest of the World segments are projected to grow 3 to 5 percent in Q3, though China's macro environment has pressured results for some time.
Store expansion continues at a measured pace: Lululemon plans 17 net new company-operated store openings and 15 store optimizations in Q3.
The revised guidance follows a second-quarter profit beat that failed to restore investor confidence. Concerns about slowing growth in North America—the company's largest market—have dominated sentiment despite solid near-term earnings. Earlier guidance had flagged low-double-digit declines in full-price North American sales; the shift to mid-teens now signals deteriorating demand that extends well beyond seasonal softness.
