In its six-decade journey, Lululemon has evolved from a niche yoga-wear boutique into a global juggernaut synonymous with premium athleisure. Its formula? A sleek blend of technical performance, lifestyle branding, and cult-like consumer loyalty. However, in Q1 of fiscal 2025, the company finds itself at a curious crossroads: thriving internationally but losing a bit of footing on its home turf.
Metric | Q1 FY25 |
|---|---|
Net Revenue | $2.37 billion |
• Constant Dollar Revenue Growth | +8% |
Gross Profit | $1.38 billion |
Gross Margin | 58.3% |
Operating Income | $438.6 million |
Operating Margin | 18.5% |
Diluted EPS | $2.60 |
Comparable Sales (Total) | +1% |
• Americas Comparable Sales | –2% |
• International Comparable Sales | +6% |
Inventory Level | $1.65 billion |
Inventory Growth (Units) | +16% |
Cash & Cash Equivalents | $1.33 billion |
Store Count (End of Q1) | 770 stores |
Gross Square Footage | 3.415 million sq. ft. |
Share Repurchases | $430.4 million (1.4M shares) |
Lululemon posted $2.4 billion in revenue for the quarter ending May 4, 2025 — a 7% increase year-over-year, or 8% when adjusted for currency. That’s not bad by any retail measure, especially in a climate of inflation fatigue and cautious consumer spending. The company also delivered earnings per share of $2.60, up slightly from last year’s $2.54.
Gross margins improved to 58.3%, and Lululemon remains a highly profitable business by retail standards. But the deeper you dig, the more you notice this wasn’t a victory lap. It was a cautious sprint.
The real surprise came from Lululemon’s home market — the Americas — where comparable sales actually declined 2%. Even with new product launches, brand campaigns, and a loyal customer base, U.S. consumer demand is showing signs of fatigue. Whether it's the premium price point, brand saturation, or simple macroeconomic tightening, Lululemon is no longer insulated from broader retail headwinds.
And while overall revenue in the Americas still grew 3% (4% constant currency), it’s clear the growth engine is stalling. Compare that to last year’s double-digit domestic growth, and the deceleration is hard to ignore.
Meanwhile, inventories rose 23% year-over-year, outpacing revenue and raising questions about demand forecasts. While the company claims the increase was largely intentional to support future growth, it’s a risk if sell-through softens.
If the U.S. was the drag, international was the driver.
China Mainland revenue jumped 21%, with comps up 7% — evidence that Lululemon is resonating with affluent urban consumers across Asia.
Rest of world revenue rose 16%, pushing total international sales up 19% year-over-year.
International comparable sales rose 6% overall, helping offset domestic weakness.
The company has been investing heavily in its international footprint, including its acquisition of Mexican operations in 2024 and rapid store rollouts across Asia and Europe. This strategy is clearly paying off, giving Lululemon a longer global runway than many of its peers in the premium retail space.
Despite the mixed sales story, Lululemon kept a firm grip on profitability. Gross margin expansion (+60 bps) and disciplined expense control helped keep income from operations up 1% to $438.6 million, even as operating margin dipped slightly to 18.5%.
But not all capital was directed toward growth. The company repurchased 1.4 million shares for $430 million, part of a broader pattern of returning value to shareholders. The move lifted EPS slightly and reflects confidence in long-term fundamentals, though some might argue the cash could be better deployed toward innovation or international scale-up.
For Q2, Lululemon expects revenue of $2.535–$2.560 billion, with EPS projected between $2.85–$2.90. For the full fiscal year, revenue guidance remains between $11.15–$11.3 billion, representing 5–7% growth (or 7–8% if adjusted for last year’s extra week).
In other words: steady, not spectacular.
The company’s guidance suggests no major upside surprises ahead — a prudent, perhaps even conservative, stance given the mixed start to the year. And with inventory levels high and U.S. demand in question, management is clearly playing defense and offense simultaneously.
Lululemon remains one of the best-run retailers in the business. But even the best aren’t immune to economic gravity. The current quarter tells us that the brand's global relevance is growing — but so is the pressure to maintain its premium appeal, product edge, and operational excellence.
The big question now: Can Lululemon stretch beyond its comfort zone without losing its core?
In the coming quarters, we’ll be watching:
Whether domestic comps stabilize or slip further.
How efficiently the company manages its inventory build-up.
And whether the international rocket ship keeps climbing.
Check out the full earnings report here - Lululemon Q1 2025 Report