Lululemon reports mixed Q4: International growth offsets North America decline

Canadian athletic apparel company Lululemon has announced its financial results for the fourth quarter and fiscal year ended February 1, 2026. While the group surpassed internal expectations for revenue and earnings per share (EPS), it continues to navigate a challenging retail landscape in the Americas, marked by declining store performance and increased promotional activity.

For the fourth quarter of 2025, net revenue increased 1 percent to 3.60 billion dollars. When excluding the 53rd week included in the 2024 fiscal period, net revenue rose 6 percent. However, the company faced significant headwinds in its home markets. Net revenue in the Americas decreased 4 percent, while comparable sales in the region fell 1 percent.

Commenting on the priorities for the year ahead, Meghan Frank, interim co-CEO and chief financial officer, stated: "Driving improvement in our full-price sales over the course of 2026 is also a key priority, particularly in North America, and will enable us to enhance our brand health and deliver long-term growth and value creation for shareholders."

International expansion offsets domestic cooling

The group’s global operations provided a necessary buffer to the North American slowdown. International net revenue surged 17 percent, or 14 percent on a constant dollar basis. International comparable sales were particularly robust, increasing 20 percent during the quarter.

For the full fiscal year 2025, total net revenue reached 11.10 billion dollars, representing a 5 percent increase year-over-year.

Despite the top-line growth, profitability metrics showed signs of pressure. Gross margin for the year decreased 260 basis points to 56.6 percent, and income from operations fell 12 percent to 2.20 billion dollars, while diluted earnings per share were 13.26 dollars compared to 14.64 dollars in 2024.

Strategic leadership and board refreshment

In a move to strengthen its retail expertise, Lululemon appointed Chip Bergh to its board of directors, effective immediately. Bergh previously served as president and chief executive officer of US denim giant Levi Strauss & Co. (Levi’s) from 2011 to 2024. He replaces David Mussafer, who will not stand for re-election at the 2026 annual meeting of shareholders.

Lululemon executive chair of the board, Marti Morfitt, stated: “Chip Bergh is an industry leader with a proven record of guiding successful transformations. We are confident the board will benefit from his extensive brand and retail expertise.”

The appointment comes as the company continues its search for a permanent CEO. Currently, the brand is led by interim co-CEOs Meghan Frank, and André Maestrini, the group’s president and chief commercial officer.

Investor concerns regarding brand health

The financial results were preceded by a critical statement from Lululemon founder and major shareholder, Chip Wilson. Wilson raised concerns regarding the company’s "creative engine" and its reliance on discounting to move inventory in the US and Canada.

During the earnings call, investors and analysts questioned the executive team on strategies to mitigate potential tariff impacts and the timeline for improving full-price sales. Frank noted that driving improvement in full-price sell-through is a "key priority" for the fiscal year 2026, particularly to protect brand health in North America.

Fiscal 2026 outlook

For the first quarter of 2026, the company projects net revenue between 2.40 billion dollars and 2.43 billion dollars, suggesting a growth rate of 1 percent to 3 percent. For the full year, Lululemon expects revenue to land between 11.35 billion dollars and 11.50 billion dollars, representing growth of 2 percent to 4 percent. Diluted earnings per share are expected to be in the range of 12.10 dollars to 12.30 dollars for the year. .

The company ended the fiscal year with 811 company-operated stores, having opened 44 net new locations throughout 2025.

Executives remains focused on accelerating go-to-market timelines and maintaining quality standards to combat what Wilson described as "stale and predictable" product offerings in recent seasons.