Lululemon reports solid Q3 fueled by strong international growth
Lululemon Athletica Inc. reported better-than-expected third-quarter earnings and revenue and raised its guidance as surging sales overseas made up for weaker results at home, where comp sales fell 2%.
The company has been working to improve its U.S. business amid criticism that its offerings suffered from a lack of newness. It has been updating its assortment with new brighter colors, prints and patterns.
“We are on track with our efforts to increase the penetration of seasonal newness and expect to be in line with historical levels in quarter one 2025,” CEO Calvin McDonald told analysts on the earnings call. “We continue to see significant potential for growth in the U.S. Our guest retention remains high, and we see an opportunity to drive higher revenue per guest, with more newness in the assortment.”
Net income totaled $352 million, or $2.87 a share, in the quarter ended Oct. 27, up from $249 million, or $1.96 a share, in the year-ago quarter and better than analysts had expected.
Net revenue increased 8.7% to $2.40 billion, ahead of the $2.36 billion analysts had expected. Americas net revenue increased 2%. International net revenue increased 33%.
Comparable sales increased 4%. Americas comparable sales decreased 2%. International comparable sales increased 25%.
“Our performance in the third quarter shows the enduring strength of lululemon globally, as we saw continued momentum across our international markets and in Canada,” McDonald stated in the earnings release. "Looking to the future, we are pleased with the start to our holiday season, and we remain focused on accelerating our U.S. business and growing our brand awareness around the world."
Lululemon slightly raised its full-year forecast and now expects sales to rise 9% to $10.45 billion to $10.49 billion, up from its previous forecast of growth of 8% to 9%.
“Our third quarter results, which exceeded our expectations, demonstrate the ability of our teams to be agile in a dynamic operating environment,” said Meghan Frank, CFO. “We are committed to delivering on our Power of Three ×2 revenue target of $12.5 billion in 2026 and look forward to all that lies ahead."
Lululemon’s “Power of Three ×2” growth plan calls for a doubling of the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The key pillars of the plan are product innovation, guest experience and market expansion.
The retailer added 28 new company-operated stores during the third quarter, including 14 company-operated stores from the acquisition of the Mexico operations, ending with 749 stores.
