Lululemon (LULU) earnings Q4 2025
Lululemon offered a weak 2026 outlook on Tuesday as tariffs, higher expenses and a dramatic proxy battle with its founder hurt profitability.
Athleisure’s forecast for both the current quarter and fiscal year came in lower than expected on both the top and bottom lines.
Lululemon expects first-quarter sales to be between $2.40 billion and $2.43 billion, according to LSEG; This figure is below estimates of $2.47 billion. It predicts earnings per share will range between $1.63 and $1.68, also weaker than estimates of $2.07.
For the full year, Lululemon expects sales to be between $11.35 billion and $11.50 billion, below expectations of $11.52 billion. Expectations for earnings of $12.10 to $12.30 per share were also much weaker than estimates of $12.58.
“The work is really ongoing in terms of our action plan, and we’re really focused on the importance of correcting course on some fronts,” interim CEO Meghan Frank told CNBC in an interview. “We’ve got a new creative director, the first series is starting in Q1, I would say, we’re seeing some green shoots from the product in Q1, so we’re excited about some of the momentum in that line item. We’ve had great response from some of our recent product activations and then we’re ramping up to market timeline as well.”
During Lululemon’s holiday quarter, the company beat estimates on both the top and bottom lines, but Wall Street had lowered its expectations for the period in recent months.
Here’s how the Vancouver-based retailer performed compared to Wall Street expectations in its fiscal fourth quarter, according to a survey of analysts by LSEG:
- Earnings per share: $5.01 instead of the expected $4.78
- Revenues: 3.64 billion dollars, while the expectation was 3.58 billion dollars
The company’s net income for the three months ended Feb. 1 was $586.9 million, or $5.01 per share, compared to $748.4 million, or $6.14 per share, a year earlier.
Sales rose slightly to $3.64 billion, up from $3.61 billion a year ago, up about 1%.
Lululemon raised its fiscal fourth-quarter forecast during the ICR conference in Orlando earlier this year, so all eyes are on the company’s 2026 guidance after more than a year of underperformance.
The retailer, which has always been considered a premium brand that rarely offers promotions, was turning to discounts to boost sales and move inventory. The company is trying to pull back on that strategy this year, Frank said. Lululemon said it expects the move to put pressure on sales in the near term, but over time it will bring the company back to full-priced business.
Meanwhile, he is experiencing some pressure as a result. Higher tariffs and the end of the de minimis exemption remain a major cost for the company.
Lululemon expects the tariffs to cost the company this year to rise from $275 million to $380 million on a gross basis. Taking into account mitigation efforts, the net impact is expected to increase from $213 million in 2025 to $220 million in 2026.
Lululemon has been negotiating with suppliers and taking other measures to reduce its exposure to tariffs, but has not been increasing prices to offset additional costs, especially as it has looked to promotions to boost sales in recent months. The brand was already priced toward the upper end of the market before President Donald Trump’s tariff hikes last year, leaving it with fewer tools in its arsenal to balance tasks, especially at a time when it is facing intense competition and a slowdown in the athletic apparel market.
Last year, the company increased prices on a select number of products. Frank said shoppers are still responding positively so far, but for now there are no plans to further increase those increases.
Beyond tariffs, the company is also seeing higher expenses from marketing, labor, incentives and costs related to its proxy contest with founder Chip Wilson. Wilson, Lululemon’s largest independent shareholder, has been pressuring the company to make changes to its board and criticizing the company for losing sight of its creative vision.
Just before announcing earnings, Lululemon announced that it was adding previous earnings. Levi Strauss He presented CEO Chip Bergh to the board. Bergh was not among the candidates Wilson recommended, but he has considerable experience in public companies and served as CEO of Levi’s for nearly 13 years. During his tenure at the company, Levi began pursuing a more profitable direct sales strategy, and sales increased by approximately 30%.
As part of the announcement, Lululemon said board member David Mussafer, managing partner and president of private equity firm Advent, will not run for re-election at the company’s 2026 shareholder meeting at the end of his current three-year term. This announcement marks a victory for Wilson, who has publicly criticized Mussafer. In a letter to shareholders last month, Wilson said the board oversaw the interview process for potential candidates at a time when Mussafer was up for election, creating a potential conflict of interest.
A source familiar with the matter said Wilson called on Mussafer to resign from the board for lack of independent leadership, among other issues.
Mussafer did not immediately respond to a request for comment.
Ahead of the earnings announcement, Wilson issued a statement saying shareholders would “critically evaluate” Lululemon’s claims of success or improvement when it reports results.
“The fundamental problem at Lululemon is one the Company has struggled with for years: There is a disconnect between the Company’s creative engine and the Board’s understanding of how brand strength and product excellence drive cultural strength, margin resilience, and long-term shareholder value,” he said.
Lululemon declined to comment.
While some of Lululemon’s business is still growing, growth has been seen in China and other international regions, which account for a small portion of overall revenue. Same-store sales in America, its largest region, haven’t increased in nearly two years, and Lululemon expects another year of decline in 2026.
The company said it expects sales in the Americas to fall between 1% and 3% in 2026.
Meanwhile, sales in China are expected to grow by around 20% and in the mid-teens in the rest of the world.
