Lululemon Athletica reported a decline in first-quarter (Q1) profit despite posting a 4% increase in revenue, as margins and operating income weakened compared with the same period last year.

For the quarter ended 3 May 2026, net revenue reached $2.47bn while net income declined to $195m from $314.5m in Q1 FY25.

Diluted earnings per share (EPS) decreased to $1.69 from $2.60 a year earlier.

Income from operations dropped 37% to $276.9m, while operating margin narrowed by 730 basis points to 11.2%.

Gross profit declined 3% to $1.33bn, with gross margin falling 410 basis points to 54.2%.

During the quarter, the company repurchased 2.2 million shares for $358.3m.

Lululemon also recorded a net increase of five company-operated stores, ending the period with 816 locations worldwide.

The retailer opened 11 stores and closed six during the quarter.

Regional performance was mixed.

Revenue in the Americas declined 3%, or 4% on a constant currency basis while international revenue increased 22%, or 16% on a constant currency basis.

In Mainland China, revenue rose 30%, or 23% on a constant currency basis, while comparable sales increased 20%, or 13% on a constant currency basis.

Revenue in the rest of world segment increased 13%, or 9% on a constant currency basis.

Comparable sales in the segment rose 5%, or 1% on a constant currency basis.

For Q2 FY26, Lululemon expects revenue between $2.45bn and $2.47bn, with diluted earnings per share projected at $1.76 to $1.81, based on an assumed tax rate of 30%.

The company reduced its full-year outlook and now expects FY26 revenue of $11bn to $11.15bn and diluted EPS of $10.95 to $11.15.

Lululemon said its guidance excludes any potential refunds related to International Emergency Economic Powers Act (IEEPA) tariffs and does not account for future share repurchases.

The forecast is based on management’s current expectations and does not incorporate unknown future factors, including tariffs and broader macroeconomic developments.