BofA Cuts Lululemon (LULU) PT to $185 on Slower China Growth, Reduced Full-Year Revenue Guidance

Core Insights - Lululemon Athletica Inc. is experiencing slower growth in China, prompting BofA to lower its price target from $210 to $185 while maintaining a Neutral rating [1] - The company reported FQ2 2026 net revenue of $2.5 billion, a 7% year-over-year increase, but fell short of guidance, leading to reduced full-year revenue expectations [2][3] - Updated full-year revenue guidance is now between $10.85 billion and $11 billion, reflecting a growth of 2% to 4% compared to 2024 [2] Financial Performance - For Q2, Lululemon's gross profit was $1.48 billion, representing 58.5% of net revenue, with operating income around $524 million or 20.7% of net revenue [3] - Net income for the quarter was $371 million, resulting in an EPS of $3.10 per diluted share [3] - Comparable sales increased by 1%, with a 3% sales increase in the store channel and 14 new stores opened, bringing the total to 784 [3] Revenue Channels - Digital channel revenue grew by 9%, contributing $1 billion to total revenue [3]