Canada's Lululemon posts 7% Q2 revenue growth; trims full-year outlook

The income from operations decreased 3 per cent to $523.8 million and operating margin decreased 210 basis points (bps) to 20.7 per cent.

Region-wise, Americas net revenue increased 1 per cent. International net revenue increased 22 per cent, or 20 per cent on a constant dollar basis. The comparable sales increased 1 per cent. Americas comparable sales decreased 4 per cent, or 3 per cent on a constant dollar basis. The international comparable sales increased 15 per cent, or 13 per cent on a constant dollar basis.

Diluted earnings per share (EPS) were $3.1 compared to $3.15 in Q2 2024. The company repurchased 1.1 million of its shares for a cost of $278.5 million. The company added 14 net new company-operated stores during the second quarter, ending with 784 stores.

“While we continued to see positive momentum overall in our international regions in the second quarter, we are disappointed with our US business results and aspects of our product execution. We have closely assessed the drivers of our underperformance and are continuing to take the necessary actions to strengthen our merchandise mix and accelerate our business. We feel confident in the opportunity ahead and plans we have in place to drive long-term growth,” said Calvin McDonald, chief executive officer (CEO) at Lululemon Athletica.

“In the second quarter, we exceeded expectations on EPS, but revenue fell short of our guidance driven predominantly by our US business. We are also navigating industry-wide challenges, including higher tariff rates,” said Meghan Frank, chief financial officer (CFO) at Lululemon Athletica. “In light of these dynamics, we are revising our full year outlook. As we begin the back half of the year, our brand and balance sheet remain strong, and we will continue to exercise financial discipline and strategically invest in our growth potential.”

Meanwhile, the company posted a net revenue of $4.9 billion in the first half (H1) of FY25, up 6.9 per cent. The gross profit rose to $2.86 billion, though gross margin eased slightly to 58.4 per cent from 58.7 per cent.

The operating income declined to $962.4 million, with margin narrowing to 19.7 per cent compared with 21.2 per cent, as selling, general and administrative (SG&A) expenses grew to $1.89 billion. The net income slipped 4 per cent to $685.5 million, while diluted EPS held steady at $5.7.

For the third quarter (Q3) of 2025, Lululemon is expecting a net revenue to be in the range of $2.47 billion to $2.5 billion, representing growth of 3 per cent to 4 per cent. Diluted EPS are expected to be in the range of $2.18 to $2.23 for the quarter.

For 2025, the company expects net revenue to be in the range of $10.85 to $11 billion, representing growth of 2-4 per cent, or 4 per cent to 6 per cent excluding the 53^rd week of 2024. Diluted EPS are now expected to be in the range of $12.77 to $12.97 for the year. This assumes a tax rate of approximately 30 per cent.

ALCHEMPro News Desk (SG)