Lululemon Athletica 2026 Q3 Earnings Beats Expectations as Net Income Drops 12.8%

Lululemon Athletica (LULU) reported fiscal 2026 Q3 earnings on Dec 11, 2025, with revenue rising 7.1% to $2.57 billion, surpassing the $2.48 billion analyst estimate. The company also raised full-year 2025 revenue guidance to $10.96–$11.05 billion. However, EPS declined 9.8% to $2.59, below the $2.87 in 2025 Q3, while Q4 revenue guidance of $3.5–$3.59 billion reflects a -3% to -1% year-over-year contraction.

Revenue

Lululemon’s total revenue grew to $2.57 billion in 2026 Q3, up from $2.40 billion in 2025 Q3. Company-operated stores accounted for $1.21 billion, while e-commerce revenue reached $1.07 billion. Other channels contributed $292.61 million, rounding out the $2.57 billion total. The e-commerce segment demonstrated strong performance, reflecting the brand’s digital strategy, while international markets, particularly China Mainland, drove growth.

Earnings/Net Income

Net income declined to $306.83 million in 2026 Q3, a 12.8% drop from $351.87 million in 2025 Q3. EPS fell to $2.59, down from $2.87, marking a 9.8% year-over-year decline. Despite the drop, Lululemon has sustained profitability for 19 consecutive years, underscoring its resilient business model.

Price Action

The stock price edged up 1.95% during the latest trading day, 1.86% for the week, and surged 9.78% month-to-date. However, post-earnings trading strategies underperformed: buying shares 30 days post-earnings and holding for 30 days yielded a -13.37% CAGR, -32.08% total return, and a Sharpe ratio of -0.56, significantly lagging the 71.39% benchmark.

CEO Commentary

CEO Calvin McDonald highlighted U.S. business challenges, including a 3% revenue decline, but emphasized international momentum, particularly in China Mainland (46% growth). Strategic priorities include product innovation, enhanced digital experiences, and enterprise efficiency amid tariffs. McDonald expressed confidence in the leadership transition and praised the product pipeline for “yielding positive results.”

Guidance

Lululemon provided full-year 2025 revenue guidance of $10.96–$11.05 billion (4% growth vs. 2024), with Q4 revenue expected at $3.5–$3.59 billion (-3% to -1% YoY). Full-year EPS guidance is $12.92–$13.02, with Q4 EPS at $4.66–$4.76. The company anticipates a 270 bps gross margin decline for 2025 and 580 bps in Q4, driven by tariffs and de minimis removal.

Additional News

Lululemon announced CEO Calvin McDonald will step down on January 31, 2026, with Meghan Frank (CFO) and André Maestrini (CCO) serving as interim co-CEOs. The board approved a $1 billion stock repurchase increase, and Marti Morfitt became Executive Chair to oversee the transition. The leadership shift follows challenges in the U.S. market, where comparable-store sales fell 5% year-over-year, and broader industry pressures.

The company’s strategic focus on international growth, particularly in China Mainland (20%–25% projected growth), and product innovation remains central to its long-term vision. Meanwhile, the CEO transition and interim leadership structure signal a period of recalibration as Lululemon navigates macroeconomic headwinds and evolving consumer demand.