Lululemon’s third quarter was met with a strong positive market reaction, reflecting investor confidence in its underlying business trends. Management attributed the outperformance to robust international growth, particularly in China, where revenue climbed sharply. CEO Calvin McDonald highlighted the company’s continued success in broadening its product pipeline and expanding its global footprint, stating, “We have broadened our global reach from 18 to over 30 geographies and grown the company's China Mainland business into our second largest market.” Despite some softness in North America, the company credited technical innovation and strong outerwear demand for supporting performance activities.
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Lululemon (LULU) Q3 CY2025 Highlights:
- Revenue: $2.57 billion vs analyst estimates of $2.48 billion (7.1% year-on-year growth, 3.7% beat)
- EPS (GAAP): $2.59 vs analyst estimates of $2.21 (17% beat)
- Adjusted EBITDA: $563.3 million vs analyst estimates of $494.4 million (22% margin, 13.9% beat)
- Revenue Guidance for Q4 CY2025 is $3.54 billion at the midpoint, below analyst estimates of $3.57 billion
- EPS (GAAP) guidance for the full year is $12.97 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 17%, down from 20.5% in the same quarter last year
- Locations: 796 at quarter end, up from 749 in the same quarter last year
- Same-Store Sales rose 1% year on year (4% in the same quarter last year)
- Market Capitalization: $24.38 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Lululemon’s Q3 Earnings Call
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Matthew Boss (JPMorgan) asked about the timing for U.S. product assortment improvements; CFO Meghan Frank confirmed newness will ramp in early 2026, with marketing activations starting in Q1.
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Dana Telsey (Telsey Group) questioned which product segments will see innovation first; CEO Calvin McDonald pointed to performance categories and lounge as early beneficiaries, citing updated Scuba and Milemaker introductions.
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Adrienne Yih-Tennant (Barclays) probed on price increases and future margin support; Frank clarified no further price hikes are planned, and margin recovery will be a multiyear effort given tariff effects.
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Brooke Roach (Goldman Sachs) inquired about core franchise performance and the need for a reset; McDonald described strong international response to product refreshes and ongoing U.S. tests to improve in-store newness visibility.
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Lorraine Maikis (Bank of America) asked about the Amex partnership’s impact; McDonald said it is driving new guest acquisition, while Frank noted it is a small but profitable piece of the business.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely watch (1) signs of traffic and full-price sales improvement in North America, (2) the effectiveness of new product launches in boosting guest engagement and spend, and (3) progress in offsetting tariff-driven margin pressures through supply chain and pricing initiatives. The pace of leadership transition and execution on international expansion will also be critical to monitor.
Lululemon currently trades at $216.46, up from $187.50 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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