Lulu's Fashion Lounge (LVLU) Q1 2026 earnings summary

Executive summary

• Net revenue for the quarter was $57.5 million, down 10% year-over-year, primarily due to a 15% decrease in total orders and higher return rates, partially offset by higher average order value and increased wholesale revenue.

• Gross margin expanded by 480 basis points to 45.1%, the highest Q1 margin since 2022, driven by a more focused assortment, higher-margin products, and freight cost savings.

• Net loss narrowed to $4.1 million from $8 million in the prior year, reflecting improved gross margin and reduced operating expenses.

• Adjusted EBITDA loss improved to $1.5 million from $4.7 million in Q1 2025, with margin improving to -2.7% from -7.3%.

• Wholesale channel revenue doubled year-over-year, expanding brand reach and customer acquisition.

Financial highlights

• Cost of revenue decreased 18% year-over-year to $31.6 million, reflecting lower sales volume and freight cost savings.

• Selling and marketing expenses declined 12% to $14.0 million, mainly due to lower online marketing and merchant processing fees.

• General and administrative expenses fell 14% to $15.5 million, driven by lower labor, benefits, and equity-based compensation.

• Free cash flow was $6.5 million, compared to $7.8 million in Q1 2025.

• Net debt decreased by $5.8 million to $5.9 million at quarter end.

Outlook and guidance

• Expect positive adjusted EBITDA in Q2 2026 and for the full year, with net revenue growth trend improving year-over-year.

• Capital expenditures for 2026 projected between $2 million and $2.5 million, similar to 2025.

• Anticipate stabilization and growth in active customers in the second half of 2026, with stronger product foundations supporting improved revenue and profitability in 2027.

• Outlook incorporates headwinds from tariffs, inflation, macroeconomic uncertainty, and consumer demand volatility.

• Cost reduction and cash conservation measures are expected to support liquidity and operational flexibility.