Lululemon Athletica Inc. (LULU) on Thursday reported lower first-quarter earnings as margin pressure and weaker performance in the Americas offset strong international growth.
Net income dropped to $195.0 million, or $1.69 per share, from $314.6 million, or $2.60 per share, in the prior-year quarter.
Net revenue increased 4.3% to $2.47 billion from $2.37 billion a year earlier. Revenue in the Americas declined 3%, while international revenue surged 22%, led by continued strength in China and other overseas markets.
Comparable sales increased 1%, though they declined 2% on a constant-currency basis.
Gross margin narrowed 410 basis points to 54.2%, while operating margin dropped to 11.2% from 18.5%.
For the second quarter, Lululemon expects revenue of $2.45 billion to $2.48 billion and earnings of $1.76 to $1.81 per share.
For fiscal 2026, the company now expects revenue of $11.0 billion to $11.15 billion, representing a decline of up to 1%, and earnings of $10.95 to $11.15 per share.
Meghan Frank, Interim Co-CEO and Chief Financial Officer, stated: "More recently, we have been navigating headwinds that have led us to adjust our outlook for the full year. We have assessed the business and are taking additional actions to reposition where needed and further strengthen our product engine. We remain confident in our path forward."
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