Name: lululemon athletica inc. Q3 2025 Earnings Call
Start: 2024-12-05T21:31:00.000Z

Executive Summary

Q3 2025 results have not been reported yet; Lululemon guided Q3 net revenue to $2.470–$2.500B and EPS to $2.18–$2.23, citing U.S. softness and tariff headwinds; Street was higher at ~$2.56B revenue and ~$$2.90 EPS, implying an anticipated miss versus prior consensus .
Q2 2025 delivered revenue of $2.525B (+7% YoY) and diluted EPS of $3.10 with operating margin 20.7%; management revised FY25 guidance lower (revenue: $10.85–$11.00B; EPS: $12.77–$12.97) due to U.S. demand and tariff impacts (~$240M gross profit reduction) .
International continued to outperform with Q2 comparable sales +15% (constant dollar +13%) while Americas comps fell 4%; store count ended Q2 at 784 (+14 net adds) .
Q1 2025 was steady: revenue $2.371B (+7% YoY), diluted EPS $2.60, gross margin 58.3%, comps +1% (Americas -2%, International +6%) .
Philanthropy and brand initiatives continued in Q3 period (Oct): Lululemon launched “lululemon Gives,” committing $100M through 2030 to mental health and wellbeing programs, reinforcing brand engagement ahead of holiday .

What Went Well and What Went Wrong

International strength: Q2 comparable sales +15% (constant dollar +13%), China Mainland net revenue +25% (constant dollar +24%) underscoring robust international demand .
EPS resilience: Q2 diluted EPS of $3.10 despite revenue underperformance and margin compression; Q1 diluted EPS of $2.60 with gross margin expansion to 58.3% .
Brand and impact initiatives: “lululemon Gives” launched with $100M planned funding through 2030 to advance mental health and wellbeing, supporting long-term brand equity .

U.S. softness and product execution: Management explicitly cited disappointment with U.S. results and aspects of product execution in Q2, prompting actions to strengthen merchandise mix .
Margin pressure and tariffs: Q2 gross margin declined 110 bps YoY to 58.5% and operating margin fell 210 bps to 20.7%; FY25 outlook includes ~($240M) gross profit hit from higher tariffs and removal of de minimis .
Lowered FY25 guidance: FY25 revenue revised to $10.85–$11.00B and EPS to $12.77–$12.97, reflecting macro/tariff headwinds and U.S. demand challenges; Q3 guidance (EPS $2.18–$2.23; revenue $2.47–$2.50B) below prior Street consensus .

Metric	Q2 2024	Q1 2025	Q2 2025	Q3 2025 Guidance
Revenue ($USD Billions)	$2.371	$2.371	$2.525	$2.470–$2.500
Diluted EPS ($)	$3.15	$2.60	$3.10	$2.18–$2.23
Gross Margin (%)	59.6%	58.3%	58.5%	—
Operating Margin (%)	22.8%	18.5%	20.7%	—

Segment/Regional and KPI highlights:

Comparable Sales Growth (%)
- Q1 2025: Americas -2%, International +6% (constant dollar +7%) .
- Q2 2025: Americas -4%, International +15% (constant dollar +13%) .
Net Revenue Growth (%)
- Q1 2025: Americas +3% (constant dollar +4%), International +19% (constant dollar +20%) .
- Q2 2025: Americas +1%, International +22% (constant dollar +20%) .
Store Count (end of period): Q3 2024: 749; Q1 2025: 770; Q2 2025: 784 .
Inventories: Q1 2025 $1.652B; Q2 2025 $1.723B .
Cash & Equivalents: Q1 2025 $1.325B; Q2 2025 $1.156B .

Prior-year Q3 context:

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue ($USD Billions)	Q3 2025	—	$2.470–$2.500	New quarterly guide
Diluted EPS ($)	Q3 2025	—	$2.18–$2.23 (tax ~30.5%)	New quarterly guide
Net Revenue ($USD Billions)	FY 2025	$11.150–$11.300 (5–7% growth; 7–8% ex-53rd week)	$10.850–$11.000 (2–4% growth; 4–6% ex-53rd week)	Lowered
Diluted EPS ($)	FY 2025	$14.58–$14.78 (tax ~30%)	$12.77–$12.97 (tax ~30%)	Lowered
Gross Profit Impact ($)	FY 2025	—	~($240M) from tariffs/de minimis removal (net of mitigation)	New headwind

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 window)	Trend
U.S. demand/product execution	Q1 steady with U.S. comps -2% (constant -1%); management confidence in product innovations and brand activations	Explicit disappointment in U.S. business, product execution; corrective actions underway	Q3 guide below Street; continued caution on U.S.	Negative in U.S.; corrective actions
International strength	Q1 Intl net revenue +19% (constant +20%); comps +6%	Q2 Intl comps +15% (constant +13%)	Focus remains on Intl outperformance	Positive
Tariffs/customs policy	Not highlighted	FY25 ~($240M) gross profit hit; de minimis removal risk	Key driver of FY guide down; Q3 guide includes higher tax rate ~30.5%	Negative macro/regulatory
AI/Technology initiatives	—	Appointed first Chief AI & Technology Officer (Aug 26)	Organizational build-out continues	Building capability
Brand/Impact initiatives	—	—	“lululemon Gives” launched; $100M by 2030 to wellbeing programs	Strengthens brand equity

CEO (Q2): “We are disappointed with our U.S. business results and aspects of our product execution… taking necessary actions to strengthen our merchandise mix and accelerate our business.”
CFO (Q2): “We exceeded expectations on EPS, but revenue fell short of our guidance… revising our full year outlook… navigating industry-wide challenges, including higher tariff rates.”
CEO (Oct initiative): “There is an urgent need for greater access to wellbeing support… lululemon Gives… enable more targeted mental health and wellbeing resources.”

Q3 2025 earnings call has not yet occurred or been published as of Nov 20, 2025; prior events page shows upcoming schedule not yet posted for Q3 .
Key clarifications from Q2 period: Management flagged tariff impacts (~$240M) embedded in FY guide, U.S. demand/product mix adjustments, and continued international strength .

S&P Global consensus for Q3 2025 was unavailable due to access limits at this time.
External context: Street expectations around the Q2 release were ~$2.56B revenue and ~$$2.90 EPS for Q3, above company guidance ($2.470–$2.500B and $2.18–$2.23), implying potential miss if guidance holds .

Metric	Q3 2025 Guidance	Q3 2025 External Consensus (Non-SPGI)
Revenue ($USD Billions)	$2.470–$2.500	~$2.56
EPS ($)	$2.18–$2.23	~$2.90

Note: S&P Global consensus was unavailable; table uses publicly reported third-party context.

Q3 guide below prior Street consensus suggests expectations reset; positioning into the print favors caution on U.S. demand and tariff exposure while international strength provides partial offset .
Watch for merchandise mix and product execution improvements in North America to drive sequential recovery; management flagged corrective actions .
Tariff and customs policy remains a material swing factor; ~$240M gross profit headwind embedded in FY guide highlights sensitivity to regulatory changes .
International momentum and store growth (784 at Q2) underpin medium-term expansion; monitor China Mainland trends and broader international comp trajectory .
Margin trajectory: Q2 gross margin -110 bps and operating margin -210 bps YoY; the balance between pricing, vendor savings, and tariffs will drive FY profitability .
Brand equity initiatives (lululemon Gives) support engagement heading into holiday; not directly financial, but potentially supports demand and customer loyalty .
Near-term trading setup: With lowered FY guide and Q3 guide below Street, the print’s catalyst hinges on holiday commentary, U.S. recovery signs, and quantified tariff mitigation; estimate revisions likely biased lower absent upside surprises .