#Lululemon Q4 Revenue Flat Amid Margin Pressures
Lululemon Athletica Inc. (NASDAQ: LULU) reported fourth-quarter fiscal 2025 financial results showing revenue increased 1% year over year (flat on a constant-dollar basis), with growth in international markets offset by declines in the Americas. Total net revenue for the quarter was $3.6 billion, roughly unchanged from the same period in fiscal 2024, while diluted earnings per share declined to $5.01 from $6.14 a year earlier.
Comparable sales increased 3% globally, or 2% on a constant currency basis, reflecting continued demand in certain international regions. Excluding the impact of an extra week in the prior fiscal year, revenue increased 6%, according to company disclosures.
#International growth offsets Americas decline
Regional performance during the quarter showed divergence across markets. Revenue in the Americas declined 4% year over year to $2.7 billion, representing 74% of total revenue, compared with 77% in the prior-year quarter. Comparable sales in the region fell 1%.
In contrast, China Mainland revenue rose 24% to $528.4 million, with comparable sales increasing 30%. Growth was also recorded in other international markets, where revenue increased 10% to $431.5 million.
The company continued expanding its retail footprint, ending the quarter with 811 company-operated stores, up from 767 a year earlier. New store openings included seven locations in China Mainland, six in the Americas, and two in other international markets.
The geographic shift in revenue contribution reflects a broader trend among global apparel companies, which have increasingly relied on international markets—particularly China—for growth amid more moderate demand conditions in North America.
#Margins and profitability decline
Despite stable top-line performance, profitability metrics declined compared with the prior year. Gross profit for the quarter was $2.0 billion, representing 54.9% of revenue, down from 60.4% in the same quarter last year.
The company attributed the decline in gross margin primarily to lower product margins, citing higher tariffs, increased markdowns, and the impact of credit card-related programs. These factors were partially offset by pricing actions and lower product costs.
Operating income fell to $812.3 million, or 22.3% of revenue, compared with $1.0 billion, or 28.9%, in the prior-year period. Selling, general and administrative expenses increased to $1.2 billion, representing 32.5% of revenue, reflecting higher costs tied to foreign exchange effects and ongoing brand investments.
Net income for the quarter was $586.9 million, while the effective tax rate decreased slightly to 27.8% from 29.2% a year earlier.
#Capital allocation and balance sheet position
During the quarter, Lululemon repurchased 1.4 million shares for $269.1 million. Diluted share count declined to 117.2 million from 121.9 million in the prior-year period.
Capital expenditures totaled $183.2 million, down from $235.0 million a year earlier, with spending focused on distribution infrastructure, new store openings, renovations, and technology investments.
The company ended the quarter with $1.8 billion in cash and cash equivalents and reported available capacity of $593.6 million under its revolving credit facility. Inventory levels increased 18% year over year to $1.7 billion, with unit growth of 6%.
#Broader context and outlook considerations
The company’s results come amid ongoing macroeconomic uncertainty, shifting consumer demand patterns, and evolving global trade dynamics. Management cited factors such as tariffs, foreign exchange fluctuations, and cost pressures as influencing margins during the quarter.
Lululemon also noted that its fiscal 2024 included a 53rd week, which impacts direct comparisons with fiscal 2025 results. Adjusted figures excluding this timing difference indicate stronger underlying revenue growth than headline figures suggest.
Looking ahead, the company indicated it remains focused on international expansion, product innovation, and operational investments. However, it also highlighted a range of risks that could affect future performance, including competitive pressures, supply chain disruptions, changing consumer preferences, and geopolitical and economic conditions.
These forward-looking statements are subject to uncertainties, and actual results may differ materially depending on market conditions and execution factors, the company said.