lululemon(LULU) - 2026 Q2 - Quarterly Results

Second Quarter Fiscal 2025 Results Overview Lululemon reported Q2 FY2025 net revenue of $2.5 billion, a 7% increase, with diluted EPS of $3.10, while facing declining margins and US business challenges 1.1 Key Financial Highlights (Q2 FY2025) Lululemon achieved net revenue of $2.5 billion in Q2 FY2025, a 7% YoY increase, with diluted EPS of $3.10. Comparable sales grew 1%, but both gross and operating margins declined | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------------- | :---------- | :---------- | :----------- | | Net Revenue (in billions) | $2.5 | $2.37 | +7% | | Net Revenue (constant $) | | | +6% | | Comparable Sales | +1% | | | | Americas Net Revenue | +1% | | | | International Net Revenue | +22% | | | | Americas Comparable Sales | -4% | | | | International Comparable Sales | +15% | | | | Gross Profit (in billions) | $1.5 | $1.41 | +5% | | Gross Margin | 58.5% | 59.6% | -110 bps | | Income from Operations (in millions) | $523.8 | $540.2 | -3% | | Operating Margin | 20.7% | 22.8% | -210 bps | | Diluted EPS | $3.10 | $3.15 | -1.6% | | Shares Repurchased (in millions) | 1.1 | | | | Cost of Repurchase (in millions) | $278.5 | | | | Net New Stores Added | 14 | | | | Total Stores | 784 | | | 1.2 Management Commentary The CEO noted positive international momentum but expressed disappointment with US business performance and product execution, initiating improvement measures. The CFO stated that despite exceeding EPS expectations, revenue missed guidance due to US business and tariff challenges, leading to a revised full-year outlook - CEO Calvin McDonald stated that international regions maintained positive momentum, but expressed disappointment with US business performance and product execution, with the company taking necessary steps to strengthen its merchandise assortment and accelerate business development[2] - CFO Meghan Frank noted that Q2 diluted EPS exceeded expectations, but revenue missed guidance, primarily due to US business and industry-wide challenges, including higher tariffs, leading the company to revise its full-year outlook[3] 1.3 Balance Sheet Highlights As of Q2 FY2025 end, the company held $1.2 billion in cash and cash equivalents. Inventories increased 21% year-over-year to $1.7 billion, or 13% on a unit basis | Metric | Q2 FY2025 End | Q2 FY2024 End | Change (YoY) | | :---------------------- | :------------ | :------------ | :----------- | | Cash and Cash Equivalents (in billions) | $1.2 | $1.61 | -25.4% | | Revolving Credit Facility Capacity (in millions) | $393.2 | | | | Inventories (in billions) | $1.7 | $1.4 | +21% | | Inventories (unit basis) | | | +13% | Financial Outlook The company revised its full-year FY2025 net revenue guidance to $10.85 billion-$11.00 billion, reflecting anticipated impacts from tariffs and macroeconomic trends 2.1 Third Quarter Fiscal 2025 Outlook The company projects Q3 FY2025 net revenue between $2.47 billion and $2.50 billion, a 3% to 4% YoY increase, with diluted EPS expected to be $2.18 to $2.23 | Metric | Q3 FY2025 Guidance | | :------------------ | :----------------- | | Net Revenue (in billions) | $2.470 - $2.500 | | Net Revenue Growth | 3% - 4% | | Diluted EPS | $2.18 - $2.23 | | Assumed Tax Rate | ~30.5% | 2.2 Full Year Fiscal 2025 Outlook The company revised its full-year FY2025 net revenue outlook to $10.85 billion to $11.00 billion, representing 2% to 4% YoY growth (4% to 6% excluding the 53rd week of FY2024). Diluted EPS is projected at $12.77 to $12.97 | Metric | FY2025 Guidance (Revised) | | :------------------------------------ | :-------------------------- | | Net Revenue (in billions) | $10.850 - $11.000 | | Net Revenue Growth | 2% - 4% | | Net Revenue Growth (excl. 53rd week) | 4% - 6% | | Diluted EPS | $12.77 - $12.97 | | Assumed Tax Rate | ~30% | 2.3 Outlook Assumptions and Risks The FY2025 guidance includes an estimated $240 million reduction in gross profit due to increased US import duties and the elimination of de minimis exemptions, partially offset by vendor savings and pricing actions. This guidance excludes potential future share repurchases and is subject to risks like tariffs, consumer demand, and macroeconomic trends - The FY2025 guidance anticipates a reduction in gross profit of approximately $240 million, primarily due to increased US import duties and the elimination of "de minimis exemptions," partially mitigated by vendor savings and pricing actions[9] - This guidance does not reflect potential future share repurchases by the company[10] - The outlook is based on management's expectations as of the release date and does not include future unknown impacts, such as tariffs and macroeconomic trends[11] Company Information This section provides an overview of Lululemon Athletica Inc., details regarding its Q2 FY2025 conference call, and contact information for investor and media relations 3.1 About Lululemon Athletica Inc. Lululemon Athletica Inc. is a technical athletic apparel, footwear, and accessories company for yoga, running, training, and other activities, known for fabric innovation and functional design, collaborating with global communities for product development - Lululemon Athletica Inc. is a company providing technical athletic apparel, footwear, and accessories for yoga, running, training, and most other activities[13] - The company sets the standard in fabric innovation and functional design, collaborating with yogis and athletes in local communities worldwide for ongoing research and product feedback[13] 3.2 Conference Call Information The company held a conference call on September 4, 2025, at 4:30 PM ET to discuss Q2 results, providing details for participation and online webcast access - The conference call to discuss Q2 results was held on September 4, 2025, at 4:30 PM ET[12] - Participants could join by dialing 1-833-752-3550 (international 1-647-846-8290) or by listening to the webcast online via the company's website at https://corporate.lululemon.com/investors/news-and-events/events-and-presentations[12](index=12&type=chunk) 3.3 Investor and Media Contacts The report provides contact details for Lululemon Athletica Inc. investor contacts Howard Tubin and Joseph Teklits of ICR, Inc., and media contact Madi Wallace - Investor contacts include Howard Tubin of Lululemon Athletica Inc. and Joseph Teklits of ICR, Inc[24] - The media contact is Madi Wallace of Lululemon Athletica Inc[24] Non-GAAP Financial Measures & Reconciliations This section explains the use of non-GAAP metrics like "constant dollar" and the adjustment for the 53rd week of FY2024 to ensure consistent financial comparisons 4.1 Explanation of Non-GAAP Measures The company uses "constant dollar" as a non-GAAP metric to exclude exchange rate fluctuations from net revenue growth. Due to FY2024 having 53 weeks, comparable sales are calculated on a one-week shifted basis for consistent year-over-year comparison - "Constant dollar" is a non-GAAP financial measure that assumes average foreign currency exchange rates remain consistent with the prior year, aiming to help investors understand the underlying net revenue growth rate excluding currency impacts[15][18] - Due to the 53rd week in fiscal 2024, comparable sales are calculated on a one-week shifted basis, comparing the 13 weeks ended August 3, 2025, to the 13 weeks ended August 4, 2024[14][33] - Fiscal 2024 included 53 weeks, while fiscal 2025 will have 52 weeks, impacting year-over-year comparisons[19][36] 4.2 Constant Dollar Changes (Net Revenue & Comparable Sales) In Q2 FY2025, international net revenue grew 22% (20% at constant dollars), while Americas net revenue grew 1% (1% at constant dollars). International comparable sales increased 15% (13% at constant dollars), while Americas comparable sales decreased 4% (3% at constant dollars) 2025 Fiscal Second Quarter Net Revenue (Constant Dollar Change) | Region | Change | Foreign Exchange Impact | Change in Constant Dollars | | :---------------- | :----- | :---------------------- | :----------------------- | | United States | — % | — % | — % | | Canada | 1 % | — % | 1 % | | Americas | 1 % | — % | 1 % | | China Mainland | 25 % | (1)% | 24 % | | Rest of World | 19 % | (4)% | 15 % | | Total International | 22 % | (2)% | 20 % | | Total | 7 % | (1)% | 6 % | 2025 Fiscal Second Quarter Comparable Sales (Constant Dollar Change) | Region | Change | Foreign Exchange Impact | Change in Constant Dollars | | :---------------- | :----- | :---------------------- | :----------------------- | | Americas | (4)% | 1 % | (3)% | | China Mainland | 17 % | (1)% | 16 % | | Rest of World | 12 % | (3)% | 9 % | | Total International | 15 % | (2)% | 13 % | | Total | 1 % | — % | 1 % | 4.3 Expected Net Revenue Increase Excluding 53rd Week The expected net revenue increase for FY2025 is 2% to 4%, or 4% to 6% when excluding the impact of the 53rd week in FY2024 2025 Fiscal Year Expected Net Revenue Increase (Excluding 53rd Week Impact) | Metric | Fiscal 2025 | | :------------------------------------------ | :---------- | | Expected net revenue increase | 2% to 4% | | Impact of 53rd week | 2% | | Expected net revenue increase excluding 53rd week (non-GAAP) | 4% to 6% | Forward-Looking Statements This report contains forward-looking statements, including guidance and outlook, based on current management expectations, but involves multiple risks and uncertainties such as brand reputation, market competition, consumer preferences, international expansion, supply chain disruptions, tariff policies, macroeconomic fluctuations, and litigation; the company assumes no obligation to update these statements - Forward-looking statements, including company guidance and outlook, are based on management's current expectations but involve multiple risks and uncertainties[21] - Key risks include maintaining brand value, market competition, predicting consumer preferences, international market expansion, managing business complexities, changes in tariff policies, macroeconomic fluctuations, supply chain disruptions, and protecting intellectual property[21] - The company assumes no obligation to publicly update such forward-looking statements, unless required by law[23] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated statements of operations, balance sheets, and cash flows for the second quarter and first two quarters of fiscal year 2025 6.1 Condensed Consolidated Statements of Operations In Q2 FY2025, net revenue increased to $2.525 billion, but net income decreased from $392.9 million in Q2 FY2024 to $370.9 million, with both gross and operating margins declining Condensed Consolidated Statements of Operations (Q2 FY2025 vs Q2 FY2024) | Metric | Q2 FY2025 (in thousands) | Q2 FY2024 (in thousands) | | :---------------------------------- | :----------------------- | :----------------------- | | Net revenue | $2,525,219 | $2,371,078 | | Costs of goods sold | $1,048,017 | $958,893 | | Gross profit | $1,477,202 | $1,412,185 | | Gross profit as % of net revenue | 58.5% | 59.6% | | Selling, general and administrative expenses | $951,658 | $871,959 | | Selling, general and administrative expenses as % of net revenue | 37.7% | 36.8% | | Income from operations | $523,814 | $540,226 | | Income from operations as % of net revenue | 20.7% | 22.8% | | Net income | $370,905 | $392,922 | | Diluted earnings per share | $3.10 | $3.15 | 6.2 Condensed Consolidated Balance Sheets As of August 3, 2025, total assets were $7.523 billion, a slight decrease from February 2, 2025, but an increase from July 28, 2024. Cash and cash equivalents significantly decreased from the fiscal year-end, while inventories increased Condensed Consolidated Balance Sheets (August 3, 2025 vs July 28, 2024) | Metric | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | | :---------------------------------- | :---------------------------- | :---------------------------- | | Cash and cash equivalents | $1,155,794 | $1,610,112 | | Inventories | $1,722,570 | $1,429,043 | | Total current assets | $3,528,728 | $3,571,744 | | Total assets | $7,523,439 | $6,744,135 | | Total current liabilities | $1,557,346 | $1,468,651 | | Stockholders' equity | $4,387,279 | $4,031,645 | | Total liabilities and stockholders' equity | $7,523,439 | $6,744,135 | 6.3 Condensed Consolidated Statements of Cash Flows For the first two quarters of FY2025, net cash from operating activities significantly decreased to $209.7 million from $570.7 million in the prior year. Investing and financing activities continued to consume cash, resulting in an $828.5 million total decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (First Two Quarters 2025 vs First Two Quarters 2024) | Metric | First Two Quarters 2025 (in thousands) | First Two Quarters 2024 (in thousands) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income | $685,477 | $714,343 | | Net cash provided by operating activities | $209,722 | $570,664 | | Net cash used in investing activities | $(319,960) | $(266,625) | | Net cash used in financing activities | $(744,823) | $(916,543) | | Decrease in cash and cash equivalents | $(828,542) | $(633,859) | | Cash and cash equivalents, end of period | $1,155,794 | $1,610,112 | Supplemental Company Data This section provides additional operational data, including the number of company-operated stores and their total gross square footage for recent fiscal quarters 7.1 Company-operated Store Count and Square Footage In Q2 FY2025, Lululemon added a net of 14 company-operated stores, reaching a total of 784. Total gross square footage increased by 96,000 sq ft, totaling 3.511 million sq ft Company-operated Store Count | Quarter | Stores Open at Beginning | Stores Opened | Stores Closed | Stores Open at End | | :---------------- | :----------------------- | :------------ | :------------ | :----------------- | | Q3 2024 | 721 | 28 | — | 749 | | Q4 2024 | 749 | 21 | 3 | 767 | | Q1 2025 | 767 | 5 | 2 | 770 | | Q2 2025 | 770 | 15 | 1 | 784 | Company-operated Store Total Gross Square Footage (in thousands of square feet) | Quarter | Total Gross Square Feet at Beginning | Gross Square Feet Added | Gross Square Feet Lost | Total Gross Square Feet at End | | :---------------- | :--------------------------------- | :---------------------- | :--------------------- | :----------------------------- | | Q3 2024 | 3,075 | 156 | — | 3,231 | | Q4 2024 | 3,231 | 153 | 12 | 3,372 | | Q1 2025 | 3,372 | 50 | 7 | 3,415 | | Q2 2025 | 3,415 | 99 | 3 | 3,511 |