Lululemon's Q4 sales surge, 2025 outlook disappoints investors

Yoga wear brand Lululemon reported a strong fourth-quarter revenue surge, fuelled by its "Power of Three ×2" growth plan, which aims to double the business from its 2021 net revenue of 6.25 billion dollars to 12.5 billion dollars by 2026. Fourth-quarter revenue climbed 13 percent to 3.6 billion dollars.

However, the company's full-year forecast of 11.150 billion dollars to 11.300 billion dollars in net revenue representing growth of 5 percent to 7 percent and 14.95 to 15.15 dollars in diluted earnings per share fell below consensus expectations, indicating a tempered outlook. Investors, while acknowledging the strong results, expressed concerns regarding 100 basis point decline in operating margin for 2025 and the broader macroeconomic environment, including inflation and slower US retail traffic.

"We started this year with several compelling new product launches, but we also believe the dynamic macro environment has contributed to a more cautious consumer," CEO Calvin McDonald said in during a post-earnings call.

International growth drive's Lululemon's Q4

For the first quarter of 2025, Lululemon anticipates net revenue between 2.335 billion dollars and 2.355 billion dollars, a roughly 6 to 7 percent increase, again below analysts’ expectations. Diluted earnings per share are expected to be in the range of 2.53 dollars to 2.58 dollars for the quarter.

Lululemon’s fourth quarter revenue increase was driven by comparable sales increase of 3 percent and international comparable sales increase of 20 percent. Americas comparable sales remained flat. Diluted earnings per share increased to 6.14 dollars compared to 5.29 dollars in the fourth quarter of 2023.

The company opened 18 net new company-operated stores during the quarter, and 56 stores during the year, including 14 company-operated stores from the acquisition of the Mexico operations, ending with 767 stores.