Lululemon closed fiscal 2025 with slower growth and softer margins but still delivered record annual sales, as international strength offset a tougher North America backdrop. For fiscal 2026, the Vancouver based brand is guiding to low single digit growth while prioritizing full price selling and brand health over chasing volume.
Headline Results for Q4 and Full Year 2025
In the fourth quarter of 2025, Lululemon’s net revenue rose 1% to $3.6 billion, with flat growth on a constant currency basis, as Americas revenue fell 4% while international revenue jumped 17%. Comparable sales increased 3% overall, including a 1% decline in the Americas and a 20% gain internationally.
Gross profit for the quarter declined 8% to $2.0 billion, with gross margin contracting 550 basis points to 54.9%, while income from operations fell 22% to $812.3 million, compressing operating margin by 660 basis points to 22.3%. Diluted EPS came in at $5.01, down from $6.14 a year earlier, even as the company repurchased 1.4 million shares for $269.1 million and opened 15 net new stores, ending the year with 811 company operated locations.
For the full 2025 fiscal year, net revenue increased 5% to $11.1 billion, powered by 22% international growth against a 1% decline in Americas revenue. Comparable sales rose 2%, with a 3% drop in the Americas and a 15% increase internationally, highlighting a widening performance gap between home and growth markets.
Margins Under Pressure as Mix and Markdowns Bite
Despite higher sales, profitability stepped back in 2025. Full year gross profit was broadly flat at $6.3 billion, while gross margin narrowed 260 basis points to 56.6%, reflecting a more promotional environment, regional mix shifts and cost pressures.
Income from operations declined 12% to $2.2 billion, taking operating margin down 380 basis points to 19.9%, while diluted EPS slipped to $13.26 From $14.64 in 2024. Over the year, Lululemon returned cash to shareholders by repurchasing 5.0 million shares for $1.2 billion, even as it invested in growth by adding 44 net new stores to reach 811 globally.
The company ended 2025 with $1.8 billion in cash and cash equivalents and $593.6 million of available capacity on its revolving credit facility, alongside inventories of $1.7 billion, up 18% in dollar terms and 6% on a unit basis. This inventory build gives the brand room to support new product flows but also sharpens the focus on managing markdown risk in a more cautious consumer environment.
Leadership Commentary and Strategic Focus
André Maestrini, Interim Co-CEO, President, and Chief Commercial Officer, said, “Throughout 2025, we reported double-digit revenue growth in our international business and are taking action to incorporate learnings from across our regions to drive forward our strategies. Our teams are energized by the initial response to our recent product launches and continue to deliver successful guest activations globally. Looking ahead, we are encouraged by our opportunities in North America and around the world and are grateful to our teams for their commitment to delivering the products and experiences our guests love.”
Meghan Frank, Interim Co-CEO and Chief Financial Officer, said, “We are pleased to achieve fourth quarter revenue and EPS results ahead of our expectations. As we begin our new fiscal year, we are focused on executing on our action plan, offering new and differentiated products to our guests, and elevating their experiences with lululemon. Driving improvement in our full-price sales over the course of 2026 is also a key priority, particularly in North America, and will enable us to enhance our brand health and deliver long-term growth and value creation for shareholders.”
Future Outlook
Looking ahead, Lululemon is signaling a more measured year. For the first quarter of 2026, the company expects net revenue between $2.40 billion and $2.43 billion, implying 1% to 3% growth, and diluted EPS in the $1.63 to $1.68 range, assuming a roughly 31.5% tax rate.
For the full 2026 fiscal year, guidance calls for net revenue of $11.35 to $11.50 billion, equating to 2% to 4% growth, and diluted EPS of $12.10 to $12.30, based on an assumed 30% tax rate and excluding any future share repurchases. Management notes that this outlook does not factor in unknown macro or tariff impacts and reiterates that protecting brand equity, refining assortments, and rebuilding full price momentum, especially in the Americas, will be central to the year’s agenda.
