Lululemon Athletica 2026 Q3 Earnings Revenues Rise but Net Income Falls

Lululemon Athletica (LULU) reported Q3 2026 earnings on Dec 11, 2025, with revenue rising 7.1% year-over-year to $2.57 billion, surpassing estimates. However, EPS declined 9.8% to $2.59, and net income dropped 12.8% to $306.83 million. The company raised Q4 2026 revenue guidance slightly but fell short of consensus expectations for the quarter.

Revenue

Company-operated stores generated $1.21 billion, while e-commerce revenue reached $1.07 billion, with other channels contributing $292.61 million. Total revenue growth reflected strong e-commerce performance and international expansion, though U.S. sales faced headwinds.

Earnings/Net Income

Lululemon’s EPS fell to $2.59, a 9.8% decline from $2.87 in 2025 Q3, and net income dropped to $306.83 million, down 12.8% year-over-year. Despite 19 consecutive years of quarterly profitability, the results highlight margin pressures amid higher operating costs.

Post-Earnings Price Action Review

The strategy of buying Lululemon shares 30 days post-earnings and holding for 30 days underperformed significantly over three years, with a CAGR of -13.37% and total return of -32.08%, far below the benchmark’s 71.39%. The approach exhibited high volatility, a maximum drawdown of 0%, and a Sharpe ratio of -0.56, underscoring its risk profile.

CEO Commentary

CEO Calvin McDonald, stepping down in January 2026, emphasized the company’s 19-year profitability streak and strategic focus on international growth and product diversification. He highlighted challenges in the U.S. market but expressed confidence in the leadership team’s ability to execute the action plan.

Guidance

For Q4 2026, Lululemon projects revenue of $3.50B–$3.59B, slightly below the $3.57B consensus, and EPS of $4.66–$4.76, below the $4.97 estimate. Annual revenue guidance was raised to $10.962B–$11.047B, with EPS expected to range from $12.92–$13.02.

Additional News

Lululemon announced CEO Calvin McDonald’s departure effective January 31, 2026, with CFO Meghan Frank and CCO André Maestrini serving as interim co-CEOs. The board initiated a search for a permanent successor while expanding its stock repurchase program by $1 billion.

The company also outlined a three-pillar action plan to address U.S. market challenges, including enhancing product innovation, optimizing digital engagement, and strengthening retail execution.

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