Lululemon Athletica Inc
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +3.38%.
Did LULU Beat Earnings? Q2 2025 Results
Lululemon delivered a split verdict in its fiscal second quarter, posting a profit beat alongside a modest revenue shortfall as deepening weakness in its U.S. business continued to weigh on the athleisure brand. GAAP diluted EPS of $3.10 topped the $2.85 consensus estimate by 8.74%, though net income still fell to $370.90 million from $392.92 million a year earlier, with share buybacks helping cushion the per-share decline. Revenue of $2.53 billion grew 6.5% year over year but came in just shy of the $2.54 billion Wall Street expected, as Americas comparable sales slid 4%, offsetting robust international momentum, including a 22% revenue surge abroad and 25% growth in China Mainland. Gross margin contracted 110 basis points to 58.5%, reflecting the mounting cost pressures the company faces. Skepticism is already surfacing on Wall Street, with some analysts warning the domestic turnaround may not fully materialize until 2026. Lululemon trimmed its full-year outlook, now guiding revenue of $10.85 billion to $11.00 billion and GAAP diluted EPS of $12.77 to $12.97, absorbing an estimated $240.00 million gross profit headwind from tariffs and the removal of the de minimis exemption.
- International net revenue growth of 22% (20% constant dollar), led by China Mainland at 25% growth
- Americas comparable sales declined 4%, reflecting U.S. business weakness and product execution challenges
- Gross margin contracted 110 basis points to 58.5%
- Operating margin declined 210 basis points to 20.7%
- Total comparable sales increased 1%
- 14 net new company-operated stores opened, ending with 784 stores
“While we continued to see positive momentum overall in our international regions in the second quarter, we are disappointed with our U.S. business results and aspects of our product execution. We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business. We feel confident in the opportunity ahead and plans we have in place to drive long-term growth.”
Lululemon CEO, on the earnings call
Forward Guidance & Outlook
For Q3 2025, lululemon expects net revenue of $2.470 billion to $2.500 billion (3% to 4% growth) and diluted EPS of $2.18 to $2.23, assuming a tax rate of approximately 30.5%. For full-year 2025, the company revised its outlook downward, now expecting net revenue of $10.850 billion to $11.000 billion (2% to 4% growth, or 4% to 6% excluding the 53rd week of 2024) and diluted EPS of $12.77 to $12.97. The guidance includes an estimated $240 million gross profit reduction from higher tariffs on U.S. imports and removal of the de minimis exemption, net of mitigation efforts including vendor savings and pricing actions. Guidance does not reflect potential future share repurchases.
LULU YoY Financials
Figures from SEC filings and company reports. Not investment advice.