Lululemon Athletica Inc. reported earnings and sales exceeded its guidance in the fiscal first quarter ended May 4, but still trimmed its EPS outlook for the year and provided guidance for the second quarter that was well below analysts’ consensus target.

Lululemon now expects earnings for the year in the range of $14.58 to $14.78 per share for the year, down from previous guidance in the range of $14.95 to $15.15. The retailer reiterated its sales guidance for the year.

For the second quarter, Lululemon guided EPS to arrive in the range of $2.85 to $2.90 with sales between $2.535 billion and $2.560 billion. Analysts on average were expecting earnings of $3.32 a share on sales of $2.57 billion.

Lululemon’s officials didn’t provide a reason for the lower forecast but are expected to address it on their analyst call. Shares of Lululemon were running down about 21 percent in after-hours trading prior to the call.

Calvin McDonald, chief executive officer, said in a statement,  “In the first quarter, we achieved growth across channels, categories, and markets, including the U.S., reflecting the continued strength and agility of our business model. Additionally, guests responded well to the product innovations, newness and brand activations we delivered around the world. As we navigate the dynamic macro-environment, we intend to leverage our strong financial position and competitive advantages to play offense, while we continue to invest in the growth opportunities in front of us.”

For the first quarter of 2025, compared to the first quarter of 2024:

  • Net revenue increased 7 percent to $2.4 billion, or increased 8 percent on a constant dollar basis. Revenues topped Lululemon’s guidance in the range of $2.335 billion to $2.355 billion.
  • Americas net revenue increased 3 percent, or 4 percent on a constant dollar basis.
    International net revenue increased 19 percent, or 20 percent on a constant dollar basis.
  • Comparable sales increased 1 percent.
  • Americas comparable sales decreased 2 percent, or 1 percent on a constant dollar basis.
  • International comparable sales increased 6 percent, or 7 percent on a constant dollar basis.
  • Gross profit increased 8 percent to $1.4 billion and gross margin increased 60 basis points to 58.3 percent.
  • Income from operations increased 1 percent to $438.6 million and operating margin decreased 110 basis points to 18.5 percent.
  • The effective income tax rate for the first quarter of 2025 was 30.2 percent compared to 29.5 percent for the first quarter of 2024.
  • Diluted earnings per share were $2.60 compared to $2.54 in the first quarter of 2024. EPS surpassed Lululemon’s guidance in the range of $2.53 to $2.58.
  • The company repurchased 1.4 million of its shares for a cost of $430.4 million.
  • The company added three net new company-operated stores during the first quarter, ending with 770 stores.

Meghan Frank, chief financial officer, stated, “We delivered first quarter revenue growth at the high end of our guidance and are pleased with the start to our second quarter. Looking ahead, we remain focused on our strategy and continue to operate with discipline as we drive the business forward. We are grateful to our teams around the world who are enabling us to deliver these consistent results.”

Balance Sheet Highlights

  • The company ended the first quarter of 2025 with $1.3 billion in cash and cash equivalents and the capacity under its committed revolving credit facility was $393.4 million.
  • Inventories at the end of the first quarter of 2025 increased 23 percent to $1.7 billion compared to $1.3 billion at the end of the first quarter of 2024. On a unit basis, inventories increased 16 percent.

2025 Outlook
For the second quarter of 2025, the company expects net revenue to be in the range of $2.535 billion to $2.560 billion, representing growth of 7 percent to 8 percent. EPS is expected to be in the range of $2.85 to $2.90 for the quarter. Analysts on average were expecting earnings of $3.32 a share on sales of $2.57 billion.

For 2025, the company continues to expect net revenue to be in the range of $11.150 billion to $11.300 billion, representing growth of 5 percent to 7 percent, or 7 percent to 8 percent excluding the 53rd week of 2024. EPS is now expected to be in the range of $14.58 to $14.78 for the year, down from previous guidance in the range of $14.95 to $15.15.

Image courtesy Lululemon