Lululemon Reports Mixed Fiscal 2025 Results: Revenue Slips in Americas While International Markets Surge

Lululemon athletica inc. (NASDAQ: LULU) reported a mixed fiscal 2025 performance on March 17, 2026, highlighting a 5% increase in full-year revenue to $11.1 billion but a 1% decline in North American sales as international markets delivered robust 22% growth. While diluted earnings per share (EPS) fell to $13.26 from $14.64 in 2024, the company emphasized its strategic pivot toward international expansion and product innovation as core drivers for 2026. Interim Co-CEOs Meghan Frank and André Maestrini underscored the company’s focus on improving full-price sales in North America and leveraging global learnings to fuel long-term growth.

Lululemon’s Fiscal 2025 Financial Breakdown: Revenue Growth Masks Regional Disparities

For the fiscal year ended February 1, 2026, Lululemon reported net revenue of $11.1 billion, up 5% from $10.6 billion in fiscal 2024. However, this growth was unevenly distributed. The Americas segment, which includes the U.S. and Canada, saw a 1% decline in net revenue, while international markets—spanning Europe, Asia, and other regions—posted a 22% surge, or 21% on a constant currency basis. Excluding the extra week in fiscal 2024, revenue grew 7% overall and 6% in constant currency terms.

North America’s Soft Patch: A Closer Look at the Decline

Lululemon’s North American operations, long the bedrock of its business, faced headwinds in fiscal 2025. Net revenue in the region decreased by 1%, though this masks a sharper 4% drop when adjusted for currency fluctuations. Comparable sales in the Americas fell 3%, reflecting weaker consumer demand in its core markets. The company attributed the decline to macroeconomic pressures, including rising prices and shifting consumer priorities, particularly in the U.S. where discretionary spending on apparel has softened. Meghan Frank, Interim Co-CEO and CFO, noted that improving full-price sales in North America is a ‘key priority’ for 2026, signaling a push to regain market share through targeted product offerings and experiential retail strategies.

International Expansion: The Engine of Lululemon’s Growth

In stark contrast to North America’s struggles, Lululemon’s international business delivered standout performance. International net revenue surged 22% to $3.3 billion, or 21% on a constant currency basis, driven by strong double-digit growth in Europe and Asia. Comparable sales in international markets rose 15% (14% in constant currency), outpacing the Americas by a wide margin. André Maestrini, Interim Co-CEO and President, highlighted the company’s ability to ‘incorporate learnings from across regions’ and adapt its strategies to local preferences, which has fueled success in markets like China and the UK. The company also opened 44 net new company-operated stores globally in 2025, expanding its footprint to 811 stores by year-end, with a particular focus on high-growth urban hubs.

Profitability Pressures: Margins Shrink as Costs Rise

Despite revenue growth, Lululemon’s profitability took a hit in fiscal 2025. Gross profit remained flat at $6.3 billion, but gross margin declined by 260 basis points to 56.6%, reflecting higher product costs, supply chain inefficiencies, and promotional pressures. Operating income fell 12% to $2.2 billion, with operating margins dropping 380 basis points to 19.9%. The company’s effective tax rate was relatively stable at 29.5%, compared to 29.6% in 2024. Diluted EPS decreased to $13.26 from $14.64, a 9.5% year-over-year decline. These margin pressures underscore the challenges Lululemon faces in balancing pricing power, cost management, and consumer demand in a post-pandemic retail landscape.

Inventory Surge Signals Strategic Shift or Growing Pains?

One of the most notable trends in Lululemon’s fiscal 2025 results was a significant inventory build-up. Ending inventory rose 18% to $1.7 billion, or 6% on a unit basis, raising questions about overstocking or strategic preparation for 2026 launches. The increase follows a period of supply chain disruptions and volatile consumer behavior, where retailers have struggled to align inventory levels with demand. While inventory growth can be a sign of confidence in future sales, it also introduces risks, such as higher markdowns or write-offs if trends shift. The company’s guidance for Q1 2026 suggests cautious optimism, with revenue expected to grow just 1% to 3% to $2.4 billion, and EPS projected between $1.63 and $1.68.

Shareholder Returns and Stock Buybacks: A Vote of Confidence

Lululemon continued to prioritize shareholder returns in fiscal 2025, repurchasing 5 million shares for $1.2 billion—a move that underscores confidence in the company’s long-term prospects despite near-term financial headwinds. The buyback program reflects management’s belief that the current stock price does not fully capture Lululemon’s growth potential, particularly in international markets. As of February 1, 2026, the company had $1.8 billion in cash and cash equivalents and $593.6 million available under its revolving credit facility, providing ample liquidity for future investments or additional buybacks. The company’s next fiscal year, 2026, is expected to see revenue grow 2% to 4% to between $11.35 billion and $11.5 billion, with EPS projected at $12.10 to $12.30.

The Road Ahead: Challenges and Opportunities for Lululemon in 2026

Looking to fiscal 2026, Lululemon faces a balancing act between revitalizing its North American business and capitalizing on international growth. The company’s leadership has outlined a multi-pronged strategy: driving full-price sales in North America through product innovation and elevated guest experiences; leveraging global insights to refine regional strategies; and maintaining disciplined cost management to protect margins. Key risks include persistent inflationary pressures, potential tariffs, and macroeconomic uncertainty, which could further dampen consumer spending. However, Lululemon’s strong brand equity, loyal customer base, and track record of innovation position it well to navigate these challenges. The company’s upcoming conference call on March 17, 2026, will provide further clarity on its 2026 outlook and operational priorities.

Lululemon in the Broader Athleisure Market: Trends and Competitive Landscape

Lululemon operates in the highly competitive athleisure market, which has evolved significantly since the pandemic-driven surge in demand for comfortable, versatile apparel. The segment, valued at over $300 billion globally, has seen increased competition from traditional retailers, fast-fashion brands, and direct-to-consumer disruptors. Companies like Nike, Adidas, and Under Armour have expanded their yoga and training lines, while direct-to-consumer brands like Gymshark and Alo Yoga have gained traction with younger consumers. Lululemon’s differentiation lies in its premium positioning, technical fabric innovation, and community-driven approach, including collaborations with athletes and wellness influencers. However, maintaining this edge requires continuous investment in R&D, marketing, and customer engagement—areas where Lululemon has historically excelled but now faces higher scrutiny amid margin pressures.

Key Takeaways: What Investors Need to Know About Lululemon’s Fiscal 2025

• Lululemon’s fiscal 2025 revenue grew 5% to $11.1 billion, but North American sales fell 1% while international revenue surged 22%, driven by strong performance in Europe and Asia.
• Net income per share dropped to $13.26 from $14.64 as gross margins shrank 260 basis points to 56.6% and operating margins fell 380 basis points to 19.9%.
• Inventory levels rose 18% to $1.7 billion, raising questions about overstocking or strategic preparation for 2026 product launches.
• The company repurchased 5 million shares for $1.2 billion in 2025, signaling confidence in long-term growth despite near-term headwinds.
• For fiscal 2026, Lululemon expects revenue growth of 2% to 4% and EPS between $12.10 and $12.30, with a focus on North American recovery and international expansion.

Frequently Asked Questions About Lululemon’s Fiscal 2025 Results