Q2 Earnings Reset, Structural Demand Decline, and Product-Quality Risk

The September 3 fiscal 2026 Q2 report confirmed sharp deterioration: revenue fell 4.3%, comparable sales declined 9%, Americas comps dropped 12%, North America fell 8%, and leggings sales fell about 20%. Trailing FCF of about $1.35 billion and an 11.2% yield are a qualified counterpoint, but weaker revenue and margins and a tariff-refund boost raise durability questions; Q3 on December 10 will test demand, product traction, and cash generation. Newly reviewed valuation coverage adds no fresh operating evidence.