Highlights

  • An independent board committee began reviewing strategic alternatives in July, retaining Solomon Partners and Willkie Farr & Gallagher.
  • Q2 fiscal 2026 net Revenue fell 17% to US$67.8 million as total orders declined and return rates rose.
  • Gross Margin expanded 330 basis points to 48.6%, the highest second-quarter level since 2021, while net loss narrowed.
  • Management reaffirmed expectations for positive fiscal 2026 adjusted EBITDA, compared with a US$1.2 million loss in 2025.

A formal strategic review is now running alongside the turnaround at Lulu's Fashion Lounge Holdings, Inc. (NASDAQ:LVLU), the California-headquartered women's clothing Brand known as Lulus. On 13 July 2026, the board formed a committee of independent directors to evaluate Options for increasing Shareholder value, including a possible transaction involving the company or continuing its standalone strategic plan.

The committee hired Solomon Partners as Financial Advisor and Willkie Farr & Gallagher as legal advisor. The company cautioned that the review may not produce a transaction and said it does not plan to provide updates unless a specific course of action is approved.

Smaller Sales Base, Stronger Margins in the Second Quarter

For the 13 weeks ended 28 June 2026, net revenue fell 17% to US$67.8 million from US$81.5 million, reflecting a 17% decline in total orders and higher return rates, partly offset by growth in wholesale. Active customers decreased 13% year over year to about 2.15 million, while average order value edged up to US$147 from US$145.

Profitability moved the other way. Gross Profit declined 11% to US$33.0 million, but gross margin widened 330 basis points to 48.6%. The net loss narrowed to US$1.5 million, or US$0.52 per share, from US$3.0 million, or US$1.08 per share, and adjusted EBITDA, a non-GAAP measure, doubled to US$1.0 million.

Chief Executive Crystal Landsem said management is prioritizing the long-term health of the Business over volume, pointing to wholesale revenue nearly doubling year over year as evidence of Demand beyond the company's own channels.

Tighter Inventory and Lower Borrowings

Inventory fell 23% year over year to US$28.6 million at 28 June 2026. Cash rose to US$4.1 million from US$2.7 million at 28 December 2025, while borrowings under the asset-based revolving Credit Facility dropped to US$10.1 million from US$14.4 million. Operating Cash Flow reached US$7.5 million year to date, and free cash flow was US$0.1 million in Q2.

On 27 July 2026, the company signed a second amendment to its Loan and security agreement with White Oak Commercial Finance as agent. It created a 60-day period of increased inventory availability from 21 July 2026, set rules for later availability periods and adjusted reporting thresholds tied to excess revolver availability.

Fiscal 2026 Targets Reaffirmed

Management reaffirmed its fiscal 2026 outlook, expecting positive adjusted EBITDA versus a US$1.2 million loss in 2025, an improving year-over-year net revenue trend after an 11% decline in 2025, and Capital Expenditure of US$2.0 million to US$2.5 million. Initiatives include resetting casual apparel and footwear assortments, cost reductions and continued wholesale growth. Third-quarter results had not been reported by 2 November 2026.