Lululemon Athletica Inc. reported its fourth‑quarter 2025 results on March 17, 2026, after the market closed. The company posted earnings per share of $5.01, beating the consensus estimate of $4.76 by $0.25, a 5.3% overrun. Revenue reached $3.64 billion, surpassing the $3.57 billion estimate by $70 million, a 1.9% beat.
Despite the quarterly beat, year‑over‑year comparisons show a decline. EPS fell 18.4% from $6.14 in Q4 2024, while gross margin contracted 550 basis points to 55.2% from 60.7% the prior year. The margin squeeze is attributed to higher tariffs, increased markdowns, and rising selling‑general‑administrative expenses.
Segment performance highlights a mixed picture. International revenue grew 12% to $2.12 billion, driven by strong demand in China, while North American revenue slipped 4% to $1.52 billion, reflecting softness in the core market. The company’s full‑price sales in North America lagged, prompting management to emphasize an action plan focused on new product launches and enhanced guest experiences.
Guidance for the first quarter of fiscal 2026 and the full year signals caution. Management projected Q1 FY2026 revenue of $2.40 billion to $2.43 billion, below the $2.47 billion consensus, and full‑year revenue of $11.35 billion to $11.50 billion, short of the $11.52 billion estimate. Diluted EPS for FY2026 is now expected to be $12.10 to $12.30, down from $13.26 in FY2025, underscoring concerns about continued margin pressure and weaker North American demand.
Market reaction was muted, with investors focusing on the forward guidance rather than the quarterly beat. The guidance downgrade reflects management’s view that the company will face persistent pricing pressure and competitive headwinds in the Americas, while international growth remains a tailwind.
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