lululemon athletica inc. reported financial results for the second quarter of fiscal 2026, which ended on August 2, 2026. The company announced that net revenue decreased 4% to $2.4 billion, or a 5% decline on a constant dollar basis. Comparable sales decreased 9%, or 10% on a constant dollar basis.
For the quarter, gross profit decreased 1% to $1.5 billion, resulting in a gross margin of 60.5%. This increase was attributed to $134.5 million in International Emergency Economic Powers Act (IEEPA) tariff refunds, which increased the gross margin by 560 basis points. Income from operations decreased 13% to $453.7 million, with the tariff refunds also boosting the operating margin by 560 basis points to 18.8%. The effective income tax rate for the quarter was 29.6%.
Diluted earnings per share were $2.92, compared to $3.10 in the same period of the prior year. This decrease was largely due to the $0.86 per share benefit from tariff refunds and associated interest, net of tax, which was partially offset by the revenue decline. The company repurchased 2.7 million shares for a total cost of $330.0 million during the quarter.
On the balance sheet, the company ended the quarter with $1.4 billion in cash and cash equivalents and $593.7 million of available capacity under its revolving credit facility. Inventories decreased by 1% to $1.7 billion on a dollar basis and decreased 7% on a unit basis.
Looking ahead, lululemon provided updated guidance for fiscal 2026. The company now expects net revenue to range between $10.350 billion and $10.500 billion, representing a decline of 5% to 7%. Diluted earnings per share are expected to be between $9.48 and $9.73. This outlook includes $0.86 per share from tariff refunds and associated interest recognized in the second quarter but does not reflect any further potential refunds or future share repurchases.
