Core Viewpoint - Lululemon's third-quarter revenue and earnings per share exceeded expectations, leading to an 11% increase in stock price after the announcement. The company also raised its full-year revenue guidance for 2025, despite facing increased competition and the resignation of CEO Calvin McDonald on January 31 [1][3][14]. Financial Performance - **Revenue**: Lululemon reported a 7% increase in net revenue for the third quarter, reaching $2.6 billion, surpassing analyst expectations of $2.48 billion. Comparable sales grew by 1%, with a 2% increase when adjusted for constant currency [4]. - **Gross Profit**: The gross profit for the third quarter rose by 2% to $1.4 billion, while the gross margin decreased by 290 basis points to 55.6% [5]. - **Operating Profit**: Operating profit fell by 11% to $435.9 million, with the operating margin declining by 350 basis points to 17.0% [6]. - **Earnings Per Share**: The earnings per share for the third quarter was $2.59, exceeding analyst expectations of $2.25, compared to $2.87 in the third quarter of 2024 [7]. Store and Inventory Data - **Store Count**: The company added 12 new stores in the third quarter, bringing the total to 796 stores [8]. - **Inventory**: Inventory at the end of the third quarter increased by 11% year-over-year to $2 billion, compared to $1.8 billion at the end of the third quarter of 2024 [8]. Regional Performance - **Americas**: Net revenue in the Americas declined by 2%, with comparable sales down by 5% [8]. - **International**: The international segment saw a 33% increase in net revenue, with comparable sales up by 18% [8]. Future Guidance - **Fourth Quarter 2025**: The company expects net revenue to be between $3.5 billion and $3.585 billion, a year-over-year decline of 3% to 1%, which is below analyst expectations of $3.59 billion [9]. - **Full Year 2025**: Lululemon anticipates full-year net revenue between $10.962 billion and $11.047 billion, aligning with market expectations and representing a 4% year-over-year growth [11]. The expected earnings per share for the full year is between $12.92 and $13.02, slightly above analyst expectations of $13 [12]. Leadership Changes - CEO Calvin McDonald will resign on January 31, with the board seeking a successor. Marti Morfitt will take on additional responsibilities as executive chairman during the transition [12][13]. McDonald will remain as a senior advisor until March 31 [13]. Market Challenges - Lululemon faces increasing pressure from competition and market challenges, including tariff impacts and a decline in U.S. consumer spending. The company is working to enhance product appeal and accelerate product development cycles [16][20]. The CEO's departure follows pressure from founder Chip Wilson, who has called for a renewed focus on product quality [18][19].