The Trust Layer for Market Analysts

Lululemon's Q1 2026 earnings report indicates a decline in Americas net revenue by 3% to 4% and a significant drop in gross profit by 3% year-over-year. The company's gross margin also decreased by 410 basis points to 54.2%. Operating income fell 37% to $276.9 million, with operating margin down 730 basis points to 11.2%. Despite these headwinds in the Americas, international net revenue saw a 22% increase, with China specifically growing sales by 30%. The company's financial outlook for Q2 2026 projects a net revenue decline of 3% to 2%, and for the full year 2026, a further decline of 1% to 0% is anticipated. However, the company's balance sheet remains strong with $1.5 billion in cash and equivalents, and a consistent share buyback program. The intrinsic value of the stock is estimated at $157.50, which is significantly higher than the current market price of $111.67. This suggests a potential undervalued stock despite the recent performance challenges.