lululemon athletica inc. (LULU)

lululemon athletica inc. (LULU) reported fourth-quarter fiscal 2025 results after the bell on Tuesday, delivering a top- and bottom-line beat that was overshadowed by cautious forward-looking guidance. The company posted diluted earnings per share (EPS) of $5.01, surpassing the analyst consensus of $4.77. Quarterly revenue reached $3.64 billion, a 1% year-over-year increase that slightly exceeded the $3.58 billion expected by Wall Street. Despite the beat, the report highlighted a stark divergence in regional performance: international revenue surged 17%—led by a 46% jump in China—while Americas revenue fell 4% as the brand struggled with North American market headwinds.

Profitability metrics showed significant pressure, with gross margin contracting 550 basis points to 54.9% and operating margin falling to 22.3%. Management attributed the compression to increased tariff costs and higher markdowns. Inventory levels also rose 18% year-over-year to $1.7 billion, a metric traders are watching closely as the company attempts to clear stock. To combat domestic weakness, lululemon athletica inc. (LULU) highlighted the launch of new product lines like "ShowZero" and "Unrestricted Power," which are expected to comprise 35% of the 2026 assortment.

The stock faced immediate pressure in aftermarket trading due to disappointing fiscal 2026 guidance. For the first quarter, the company expects revenue between $2.40 billion and $2.43 billion and EPS of $1.63 to $1.68, both well below consensus estimates of $2.48 billion and $2.07, respectively. Full-year 2026 EPS is projected at $12.10 to $12.30, missing the $12.73 analyst target. This conservative outlook from lululemon athletica inc. (LULU) sets a somber tone for the retail sector ahead of reports from Williams-Sonoma Inc. (WSM) and General Mills Inc. (GIS) tomorrow.