Lululemon reports mixed Q2: International sales surge, US disappoints

Lululemon Athletica Inc. announced its financial results for the second quarter of fiscal 2025, revealing a mixed performance. The company reported a 7 percent increase in net revenue to 2.5 billion dollars, but this was primarily driven by strong international growth.

The company's U.S. business results fell short of expectations, with Americas net revenue increasing by just 1 percent and comparable sales in the region decreasing by 4 percent. In contrast, international net revenue surged by 22 percent and comparable sales increased by 15 percent.

According to CEO Calvin McDonald, the company is "disappointed" with its U.S. performance. "We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business," he stated.

Lululemon's gross profit increased by 5 percent to 1.5 billion dollars, though gross margin saw a 110 basis point decrease to 58.5 percent. Income from operations also declined by 3 percent to 523.8 million dollars. Diluted earnings per share were 3.10 dollars, slightly down from 3.15 dollars in the same quarter last year.

The company repurchased 1.1 million of its shares for a cost of 278.5 million dollars during the quarter and ended the period with 784 stores after adding 14 new locations.

Lululemon also noted that it is navigating "industry-wide challenges, including higher tariff rates." As a result, the company has revised its full-year outlook. For the third quarter, Lululemon expects net revenue to be between 2.47 billion dollars and 2.50 billion dollars.

For the full fiscal year 2025, the company now projects net revenue to be in the range of 10.85 billion dollars to 11 billion dollars, and diluted earnings per share to be between 12.77 dollars and 12.97 dollars.