Athletic apparel retailer Lululemon (NASDAQ: LULU) reported Q4 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $3.64 billion. On the other hand, next quarter’s revenue guidance of $2.42 billion was less impressive, coming in 2.1% below analysts’ estimates. Its GAAP profit of $5.01 per share was 4.9% above analysts’ consensus estimates.
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Lululemon (LULU) Q4 CY2025 Highlights:
- Revenue: $3.64 billion vs analyst estimates of $3.57 billion (flat year on year, 1.8% beat)
- EPS (GAAP): $5.01 vs analyst estimates of $4.78 (4.9% beat)
- Revenue Guidance for Q1 CY2026 is $2.42 billion at the midpoint, below analyst estimates of $2.47 billion
- EPS (GAAP) guidance for the upcoming financial year 2026 is $12.20 at the midpoint, missing analyst estimates by 2.8%
- Operating Margin: 22.3%, down from 28.9% in the same quarter last year
- Locations: 811 at quarter end, up from 767 in the same quarter last year
- Same-Store Sales rose 3% year on year, in line with the same quarter last year
- Market Capitalization: $18.76 billion
Company Overview
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $11.1 billion in revenue over the past 12 months, Lululemon is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, Lululemon’s 11% annualized revenue growth over the last three years was decent as it opened new stores and increased sales at existing, established locations.
This quarter, Lululemon’s $3.64 billion of revenue was flat year on year but beat Wall Street’s estimates by 1.8%. Company management is currently guiding for a 1.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months, a deceleration versus the last three years. We still think its growth trajectory is satisfactory given its scale and suggests the market is forecasting success for its products.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Lululemon operated 811 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 7.6% annual growth, much faster than the broader consumer retail sector. This gives it a chance to become a large, scaled business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Lululemon’s demand has been healthy for a retailer over the last two years. On average, the company has grown its same-store sales by a robust 2.6% per year. This performance suggests its rollout of new stores could be beneficial for shareholders. When a retailer has demand, more locations should help it reach more customers and boost revenue growth.
In the latest quarter, Lululemon’s same-store sales rose 3% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Lululemon’s Q4 Results
It was encouraging to see Lululemon beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2% to $156.81 immediately following the results.
Lululemon may have had a tough quarter, but does that actually create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
