TLDR
- Lululemon revenue rose 5% to $11.1B despite margin pressure
- EPS fell to $13.26 as costs rose and margins declined
- International sales jumped 17%, offsetting U.S. weakness
- Q4 profit dropped with operating income down 22% YoY
- 2026 outlook steady with modest revenue and EPS growth
Lululemon Athletica Inc. (LULU) shares ended trading at $159.27, down 0.40% on Tuesday. The company reported fourth-quarter and full-year 2025 results, showing revenue growth despite margin declines. Strong international sales partially offset declines in North America, reflecting shifts in market dynamics.
Lululemon Athletica Inc., LULU
The company’s annual revenue increased 5% to $11.1 billion compared to 2024. Gross profit remained flat at $6.3 billion, while gross margin decreased 260 basis points to 56.6%. Earnings per share dropped to $13.26 from $14.64, reflecting margin pressures and operational costs.
Lululemon added 44 net new stores during 2025, ending the year with 811 locations globally. Cash and cash equivalents totaled $1.8 billion, with $593.6 million available under its revolving credit facility. Inventory levels rose 18%, showing increased stock ahead of new product launches.
Quarterly Performance Shows Mixed Results
Net revenue for Q4 2025 rose 1% to $3.6 billion, flat on a constant dollar basis. Americas revenue decreased 4%, while international sales climbed 17%, highlighting regional disparities. Comparable sales increased 3% overall but fell 1% in the Americas, signaling uneven growth.
Gross profit in the quarter dropped 8% to $2.0 billion, causing gross margin to decline 550 basis points. Operating income fell 22% to $812.3 million, with operating margin decreasing to 22.3%. Diluted earnings per share for the quarter were $5.01, down from $6.14 a year earlier.
The company repurchased 1.4 million shares for $269.1 million during Q4. Net store openings totaled 15, reflecting ongoing expansion despite challenges in North America. The effective income tax rate decreased slightly to 27.8% from 29.2% in the prior year.
Outlook for Fiscal 2026 Remains Steady
For Q1 2026, Lululemon expects net revenue between $2.400 billion and $2.430 billion. Diluted earnings per share are projected at $1.63 to $1.68, with an estimated tax rate of 31.5%. The company plans steady growth despite uncertain macroeconomic conditions affecting consumer demand.
Full-year 2026 guidance forecasts revenue in the range of $11.350 billion to $11.500 billion. Earnings per share are expected at $12.10 to $12.30, reflecting continued operational focus. Management intends to maintain expansion of product lines and international presence to support long-term growth.
Lululemon continues to prioritize full-price sales improvement, particularly in North America, to enhance brand performance. International business remains a key driver, with double-digit growth contributing to overall results. The company plans to leverage product innovation and guest experiences to sustain revenue momentum throughout 2026.
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