Lululemon experiences weak performance in Q3 2025

The Canadian sportswear brand Lululemon Athletica has released its fiscal 2025 Q3 results for the period ending November 2, 2025, showing a 7% year-over-year increase in net revenue, reaching $2.6 billion.

Performance across regions varied, with the Americas seeing a 2% decline in revenue, while international markets experienced a significant 33% growth.

Comparable sales rose by 1%, or 2% after currency adjustments. This was driven by a 18% growth in international sales, which offset the 5% drop in the Americas.

The companys gross profit increased by 2% to $1.4 billion, but its gross margin contracted by 290 basis points to 55.6%. Operating income decreased by 11% to $435.9 million, which resulted in a drop in operating margin by 350 basis points to 17%.

Lululemon's diluted earnings per share (EPS) fell to $2.59, compared to $2.87 during the same period last year. The company ended the quarter with a total of 796 stores, having opened 12 new locations.

During the quarter, Lululemon repurchased 1 million shares, totaling $189 million. On December 3, 2025, the board authorized an additional $1 billion for the share buyback program, with $1.6 billion remaining available for repurchase as of December 11, 2025.

The company closed the quarter with $1 billion in cash and cash equivalents, alongside $593 million in unused credit facility capacity.

Inventory levels grew by 11% from the previous year, totaling $2 billion, or a 4% increase in unit terms. Looking ahead to Q4, Lululemon expects revenues between $3.50 billion and $3.58 billion, marking a potential decline of 3% to 1%, or a growth of 2% to 4% after excluding the impact of the 53rd week of fiscal 2024. EPS for Q4 is forecast to be between $4.66 and $4.76.

For the full year, the company anticipates revenue between $10.962 billion and $11.04 billion, representing a 4% growth or 5% to 6% growth without the impact of the additional week. Full-year diluted EPS is projected to be between $12.92 and $13.02.

Lululemon's 2025 outlook includes a projected $210 million reduction in operating income due to higher expected U.S. import tariffs and the removal of the de minimis exemption, after mitigating efforts.

Additionally, Lululemon announced that CEO Calvin McDonald will step down from his position on January 31, 2026, and will remain as a senior advisor until March 31, 2026. The companys board has initiated a search for his successor through an external firm. Marti Morfitt, the board chair, will take on the role of executive chair, while CFO Meghan Frank and CCO Andr Maestrini will serve as interim co-CEOs following McDonald's departure.