Lululemon (LVLU) Reports Q3 2026 Revenue Decline and Net Loss Amid Assortment Challenges
Lululemon reported a challenging third quarter for fiscal 2026, characterized by a 20% decline in net revenue to $58.6 million. The downturn was primarily driven by a 20% decrease in total orders and higher return rates, alongside the lingering impact of previous assortment decisions that negatively affected customer repeat purchasing. Consequently, active customers fell by 14% year-over-year to 2.0 million. Despite top-line pressure, the company achieved a gross margin improvement of 230 basis points to 44.9%, aided by disciplined inventory management and reduced markdown sales. Management is actively working to stabilize the business through workforce reductions expected to save $5 million annually and strategic efforts to clean up product assortments in casual apparel and footwear. However, the company warned that liquidity remains a constraint as it navigates a difficult operating environment.
Topics: gross margin improvement inventory management revenue decline wholesale growth workforce reduction