Lululemon exceeded Wall Street’s expectations for its fiscal fourth-quarter earnings and revenue, but the company’s guidance for 2025 was less favorable, leading to a sharp decline in its stock price. On the earnings call, CEO Calvin McDonald highlighted a survey conducted earlier in the month, which showed that consumers are cutting back on spending due to concerns about the economy and inflation. This resulted in lower traffic at Lululemon stores in the U.S., alongside a broader slowdown in the retail sector. However, McDonald noted that customers had a positive response to the company’s new product innovations.
Shares of Lululemon fell 15% following the earnings announcement. The company joined a growing list of retailers predicting slower sales for the rest of the year amid worries about a weakening economy and the ongoing trade war, particularly with tariffs imposed by the Trump administration on imports from countries like China, Mexico, and Canada. Despite these challenges, Lululemon expects only a minimal impact on its profits from the U.S. trade disputes.
For the quarter ending February 2, Lululemon reported earnings per share of $6.14, surpassing analysts’ expectations of $5.85. The company’s revenue for the quarter reached $3.61 billion, exceeding the forecasted $3.57 billion. This marked a growth from $3.21 billion in the same quarter in 2023. Full-year revenue for fiscal 2024 was $10.59 billion, up from $9.62 billion the previous year, with a 53rd week included in the fiscal year. Without this additional week, revenue growth for both the quarter and full year was 8% year-over-year.
Looking ahead, Lululemon has projected first-quarter revenue to be between $2.34 billion and $2.36 billion, falling short of analysts’ expectations of $2.39 billion. For the full fiscal year 2025, the company expects revenue of $11.15 billion to $11.30 billion, slightly below the consensus estimate of $11.31 billion. Earnings per share for the first quarter are expected to range between $2.53 and $2.58, below Wall Street’s expectation of $2.72. The full-year earnings per share guidance was set at $14.95 to $15.15, also missing analysts’ forecast of $15.31.
Lululemon’s CFO, Meghan Frank, mentioned that gross margin for 2025 would likely drop by 0.6 percentage points due to factors such as increased fixed costs, foreign exchange rates, and tariffs. In the fourth quarter, Lululemon reported net income of $748 million, or $6.14 per share, up from $669 million, or $5.29 per share, in the previous year. Comparable sales grew by 3% year-over-year, although this was lower than the expected 5.1% increase. Sales in the Americas were flat, while international sales surged by 20%. The company also plans to expand its presence in Italy, Denmark, Belgium, Turkey, and the Czech Republic.
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