LULU Stock Move: Strong Q3 Earnings But Mixed Signals for 2025

Lululemon’s stock has been in the spotlight after its Q3 2025 earnings report showed mixed results — strong revenue growth but a decline in operating profit. While the company announced a significant increase in its stock buyback program and beat earnings estimates, it also revealed challenges in gross margin and leadership changes. With the stock reacting sharply in after-hours trading, investors are left trying to decipher what the next chapter holds for the activewear giant.

Key Q3 2025 Earnings Highlights

Lululemon reported third-quarter 2025 revenue , a 7.1% year-over-year increase. That’s a solid performance, especially when compared to analyst estimates of $2.48 billion. On the earnings front, beating estimates by 17.1%.

However, the numbers tell a more nuanced story. For instance, while revenue was up, gross profit margin dipped 290 basis points . compared to the same period last year. These figures signal that while the top line is growing, the bottom line is under pressure. The company also announced that will be stepping down in January, adding another layer of uncertainty.

Lululemon also gave investors something to cheer about: it increased its stock repurchase authorization , bringing the total available authorization to $1.6 billion. In Q3 alone, the company repurchased 1.0 million shares for $189.0 million. Meanwhile, year-over-year, showing the company’s global ambitions are paying off in at least one key market.

What Investors Should Watch

The stock reaction post-earnings was telling. immediately following the report, but

. This volatility reflects the mixed signals in the earnings release. On one hand, the company is growing revenue, expanding globally, and returning capital to shareholders. On the other hand, margin compression and leadership changes raise questions about long-term profitability and strategic direction.

One red flag is the decline in same-store sales. , . Combined with a drop in operating profit and cash flow, it suggests Lululemon may be hitting some scaling challenges. For now, . .

Investors also need to consider the broader market context. The stock is facing headwinds beyond Lululemon's control, including higher tariffs on imports from Vietnam and Cambodia and evolving consumer preferences in the activewear space. These factors could weigh on margins and growth in the coming quarters.

Looking Ahead

Lululemon’s next CEO will inherit a company that’s still growing, but not without its challenges. The board has shown a commitment to shareholder returns with the increased buyback program, and the company’s cash flow remains strong. Analysts have kept their price targets , suggesting a long-term confidence in the brand despite near-term volatility.

In the near term, investors should watch for Q4 results and how the company executes under new leadership. If Lululemon can stabilize its margins and maintain sales momentum, it could continue to be a strong performer in the consumer discretionary sector. But if the pressure on gross profit persists or the leadership transition stumbles, the stock could face more turbulence. At the end of the day, Lululemon’s ability to innovate and adapt to changing market conditions will be key to its long-term success. According to the latest analysis, the company faces both opportunities and risks in its next phase.