lululemon athletica inc.

Financial Highlights

The summary below compares the first quarter of 2026 to the first quarter of 2025:

•Net revenue increased 4% to $2.5 billion. On a constant dollar basis, net revenue increased 2%.

•Comparable sales increased 1%, or decreased 2% on a constant dollar basis.

–Americas comparable sales decreased 5%, or 6% on a constant dollar basis.

–China Mainland comparable sales increased 20%, or 13% on a constant dollar basis.

–Rest of World comparable sales increased 5%, or 1% on a constant dollar basis.

•Gross profit decreased 3% to $1.3 billion.

•Gross margin decreased 410 basis points to 54.2%.

•Income from operations decreased 37% to $276.9 million.

•Operating margin decreased 730 basis points to 11.2%.

•Income tax expense decreased 33% to $91.0 million. Our effective tax rate for the first quarter of 2026 was 31.8% compared to 30.2% for the first quarter of 2025.

•Diluted earnings per share were $1.69 compared to $2.60 in the first quarter of 2025.

Market Conditions and Trends

Net revenue in the Americas decreased 3%, and comparable sales in the Americas decreased 5%. We experienced lower conversion rates, reduced store traffic, and a decrease in average order value in the Americas. We also experienced a decrease in product margin in the Americas segment of 500 basis points, primarily reflective of the impact of higher tariffs. We have initiated an action plan to drive sustainable net revenue growth in the Americas, structured around three strategic pillars: product creation, product activation, and enterprise enablement. This includes a plan to increase the reliance of full price selling to drive sustainable revenue growth.

Net revenue in China Mainland and Rest of World increased 30% and 13%, respectively, and comparable sales increased 20% and 5%, respectively. We experienced increased traffic in these markets which led to higher comparable sales. We opened 19 net new stores in China Mainland and 13 net new stores in Rest of World which contributed to the respective increases in net revenue.

Across all markets, our business continues to be influenced by macroeconomic conditions, including trade policies, shifting consumer demand and sentiment, foreign currency fluctuations, and geopolitical instability. These factors have had varying effects across our markets and are expected to continue to impact our business throughout the remainder of 2026 and beyond.

Import Tariffs

During 2025, the United States implemented a series of trade-related policies, including removing the de minimis exemption for low-value shipments imported into the United States, and implementing higher tariffs under different statutes, including under the International Emergency Economic Power Act ("IEEPA"). These changes in the tariff landscape, including the de minimis exemption removal, had a significant adverse effect on our business and results of operations in 2025, which continues in 2026.

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the IEEPA. Immediately following this IEEPA decision, the U.S. Administration initiated new tariffs at different rates under alternative legislative powers. The U.S. Administration also confirmed that the IEEPA decision does not impact the removal of the de minimis exemption. We paid $230 million of tariffs under the IEEPA and have commenced submitting refund claims for eligible IEEPA tariffs paid, including associated interest. The ultimate amounts that we may recover remain uncertain and as of May 3, 2026, we have not recognized an asset in relation to IEEPA refund claims.

There remains significant uncertainty regarding the duration and scope of newly initiated tariffs and whether the United States will pursue additional trade actions or impose further tariffs, or currently enforced tariffs may be invalidated through legal challenges.

Because this is an evolving area, future developments may change our expectations materially. For additional information on related risks, please see “Risk Factors” in this report.

Other Factors Affecting Our Business

Foreign currency fluctuations positively impacted our financial results during the first quarter of 2026, increasing net revenue growth by $52.2 million compared to the first quarter of 2025. We expect ongoing exchange rate volatility to continue to affect our financial results.