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lululemon athletica inc. (LULU)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $3.61B (+13% YoY; +8% excluding the 53rd week) and diluted EPS was $6.14; both topped S&P consensus, with revenue at $3.58B* and EPS at $5.87* .
  • Gross margin expanded 100 bps to 60.4% and operating margin rose 40 bps to 28.9%, driven by lower product costs, fewer markdowns, and improved shrink; SG&A leverage benefited from higher top line and FX .
  • International strength continued (Q4 revenue +38%, comps +20% in constant dollars) while Americas comps were flat; management acknowledged softer U.S. traffic but improving AOV/UPT on newness .
  • FY2025 outlook: revenue $11.15–$11.30B (+5–7%; +7–8% ex-53rd week) and EPS $14.95–$15.15; margin headwinds expected from fixed-cost deleverage, FX, and tariffs (~60 bps GM decline; ~100 bps OM decline) .
  • Near-term catalysts: continued product “newness” pipeline and brand activations, offset by U.S. macro/traffic softness and tariff risk; international expansion (esp. China) and ~10% square footage growth underpin medium-term thesis .

What Went Well and What Went Wrong

What Went Well

  • EPS and revenue beat consensus; Q4 revenue $3.61B vs $3.58B* and EPS $6.14 vs $5.87*; FY2024 revenue surpassed $10B for the first time .
  • Margin expansion: GM +100 bps to 60.4% and OM +40 bps to 28.9% on lower product costs, fewer markdowns, improved shrink; SG&A leverage better than guidance .
  • International momentum: Q4 international revenue +38% (constant +40%), comps +20% (constant +22%); China Mainland Q4 comps +26% (constant +27%) .

Quote (CEO): “Our fourth quarter results exceeded our expectations as we continued to introduce more newness and innovation into our product assortment.”

What Went Wrong

  • U.S. softness: management cited industry-wide slower traffic in Q1 and a cautious consumer; Americas comps were flat in Q4 (and -2% in Q3) .
  • FY2025 margin outlook down: GM guided ~60 bps lower and OM ~100 bps lower YoY on fixed-cost deleverage, FX, and tariff headwinds (~20 bps tariff impact embedded) .
  • Elevated inventories entering 2025: year-end inventories +9% to $1.44B; Q1 inventory expected up high-teens YoY (anniversarying prior declines) .

Financial Results

MetricQ2 FY2024 (Jul 28, 2024)Q3 FY2024 (Oct 27, 2024)Q4 FY2024 (Feb 2, 2025)
Revenue ($USD Billions)$2.371 $2.397 $3.611
Gross Margin %59.6% 58.5% 60.4%
Operating Margin %22.8% 20.5% 28.9%
Diluted EPS ($)$3.15 $2.87 $6.14
Total Comp Sales YoY (%)2% 4% 3%
Total Comp (Constant $) YoY (%)3% 3% 4%

Q4 vs Estimates:

MetricConsensusActual
Revenue ($USD Billions)$3.581*$3.611
Diluted EPS ($)$5.87*$6.14

Values with asterisk retrieved from S&P Global.

Segment/Geography KPIs (Q4 FY2024):

KPIQ4 FY2024
Americas Revenue YoY (%)+7% (constant +8%)
International Revenue YoY (%)+38% (constant +40%)
Americas Comp YoY (%)0%
International Comp YoY (%)+20% (constant +22%)
China Mainland Comp YoY (%)+26% (constant +27%)
Stores End of Q4767
Digital Revenue$1.8B (50% of total)
Inventory$1.44B (+9% YoY)

Category Mix (Q4, ex-53rd week):

CategoryYoY Growth (ex-53rd week)
Women’s+6%
Men’s+12%
Accessories/Other+9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q4 FY2024$3.475–$3.510 $3.560–$3.580 Raised
EPS ($)Q4 FY2024$5.56–$5.64 $5.81–$5.85 Raised
Revenue ($B)Q1 FY2025n/a$2.335–$2.355 Initial
EPS ($)Q1 FY2025n/a$2.53–$2.58 Initial
Revenue ($B)FY2025n/a$11.15–$11.30 Initial
EPS ($)FY2025n/a$14.95–$15.15 Initial
Gross Margin YoYFY2025n/a~-60 bps YoY Lowered
Operating Margin YoYFY2025n/a~-100 bps YoY Lowered
SG&A Rate YoYFY2025n/a+40–50 bps deleverage Higher
Tax RateQ1/FY2025~30%~30% Maintained
Tariffs ImpactFY2025n/a~20 bps GM headwind New headwind

Earnings Call Themes & Trends

TopicQ-2 (Q2 FY2024)Q-1 (Q3 FY2024)Current (Q4 FY2024)Trend
U.S. demand/trafficTeams “optimize product assortment”; Americas comps -3% Focus on “accelerating our U.S. business” Cautious consumer; slower traffic; modest U.S. revenue growth expected, AOV/UPT improving on newness Stabilizing with risk
International strengthIntl rev +29%, comps +19% Intl rev +33%, comps +25% Intl rev +38%, comps +20%; China comps +26% Improving
Tariffs/FXNoted FX in outlook n/aFY25 headwinds: FX, increased tariffs (China/Mexico ~20 bps GM); de minimis removal risk highlighted later Deteriorating
Marketing/brand activationsn/aGrow brand awareness globally Heavy activations (Membership Madness; ambassador roster incl. Lewis Hamilton); marketing ~5% of sales Increasing investment
Product newness pipelinen/aPleased with holiday newness start Robust pipeline: new women’s training franchise; “Day Drift” trouser; Aligned anniversary; men’s run shorts; fabric innovation Strengthening
Square footage/store strategy+10 net openings; 721 stores +28 openings; optimization underway ~10% sq ft growth planned; 40–45 net openings in 2025; ~40 optimizations, majority of new in China Expanding

Management Commentary

  • CEO: “Total revenue, excluding the 53rd week, increased 8%… operating margin increased 40 bps to 28.9% and EPS increased 16%… we repurchased $332M of stock” .
  • CEO on U.S.: “Dynamic macro… cautious consumer… slower traffic… but guests who visit respond to newness and innovations… expect modest growth in U.S. revenue for 2025” .
  • CFO: “Q4 gross margin up 100 bps… driven by +160 bps product margin (lower product costs, lower markdowns, improved shrink), partially offset by higher airfreight; SG&A rate better than guidance” .
  • CFO: “FY2025: GM -~60 bps, SG&A +40–50 bps, OM -~100 bps vs 2024; FX drag $0.30–$0.35 on EPS” .

Q&A Highlights

  • U.S. trajectory: “Americas growing low-to-mid single digit; U.S. at lower end… Q1 not trending materially different than Q4… traffic down but AOV/UPT up on newness” .
  • Marketing strategy: strong engagement from community activations; ~15,000 member sign-ups; waiting lists; intent to flex spend as appropriate .
  • Tariffs sensitivity: ~20 bps GM headwind embedded; mitigation via vendor savings and pricing if needed .
  • Margin cadence: more pressure in Q1 (OM -120 bps YoY; SG&A deleverage -120 bps); full-year OM -~100 bps .
  • International/China: FY2025 guidance color—China +25–30%, RoW ~+20% ; majority of new stores in China .

Estimates Context

  • Q4 FY2024 beat: Revenue $3.61B vs $3.58B*; EPS $6.14 vs $5.87* .
  • Recent quarters pattern:
PeriodRevenue Consensus ($B)Revenue Actual ($B)EPS Consensus ($)EPS Actual ($)
Q3 FY20242.357*2.397 2.72*2.87
Q4 FY20243.581*3.611 5.87*6.14
Q1 FY20252.370*2.371 2.60*2.60
Q2 FY20252.540*2.526 2.86*3.10
FY202410.551*10.588 14.38*14.64

Values with asterisk retrieved from S&P Global.

Implication: Consensus will likely reset around lower FY2025 margin trajectory (GM/OM guidance), modest U.S. growth, and FX/tariff headwinds; international growth assumptions (China 25–30%) may remain robust but mix could pressure IMU if airfreight or tariffs persist .

Key Takeaways for Investors

  • Q4 delivered a clean beat with quality margin expansion; strength was broad, led by international, validating brand momentum outside the U.S. .
  • Watch the U.S. traffic narrative: management expects modest U.S. growth in FY2025 while newness lifts AOV/UPT; sustained activations aim to drive awareness and conversion .
  • FY2025 margin headwinds are explicit: fixed-cost deleverage, FX, and tariffs (including potential de minimis changes) drive GM/OM down YoY despite product margin initiatives; this is the primary stock narrative risk .
  • Mix and international expansion (esp. China) remain the top-line offsets; majority of new stores slated for China and ~10% square footage growth support multi-year revenue targets .
  • Inventory builds into spring support pipeline/newness but require disciplined markdowns (planned flat vs 2024) to protect IMU; monitor unit growth and sell-through .
  • Capital returns stay active ($1.6B FY2024 buybacks; ~$1.3B authorization remaining), but FY2025 EPS guidance excludes future repurchases; any acceleration could cushion EPS .
  • Near-term trading lens: strong international and Q4 execution vs cautious U.S./Q1 margin deleverage and tariff risk; catalysts include product launches (Aligned anniversary), marketing activations, and clarity on tariff/regulatory changes .