Lululemon's fiscal Q1 2026 revenue rose 4% (2% in constant currency) to $2.5 billion, but GAAP EPS fell to $1.69 from $2.60 a year earlier as operating margin compressed from 18.5% to 11.2%. The decline was driven by a 410 basis point gross margin contraction, with tariffs alone a 280 basis point headwind, plus markdowns and SG&A deleverage tied to softening North America demand, where revenue fell 3% and comparable sales dropped 6%. China Mainland was a bright spot, up 30% (23% in constant currency), though management flagged late-quarter weakness from negative brand commentary and underwhelming product launches such as the new look of yoga campaign. Management lowered full-year guidance, now expecting EPS of $10.95 to $11.15 (down from the prior $12.10 to $12.30 range) and revenue of $11 billion to $11.15 billion, flat to down 1%. The company is responding with increased marketing spend, faster product chase, and SKU reductions to rebuild momentum in North America.