Lululemon Athletica Inc. reported better-than-expected earnings for the fiscal first quarter, but the company has revised its full-year guidance downward, citing a “dynamic macroenvironment.” The athletic apparel retailer announced that it anticipates full-year earnings per share (EPS) to be between $14.58 and $14.78, a decrease from the prior forecast of $14.95 to $15.15.
During that same three-month period, Lululemon’s revenue reached $2.37 billion. That’s a significant jump from about $2.21 billion for the same time period in 2024. The company was up against a 2% drop in revenue in the Americas. That drop was more than made up for by a 6% jump in international sales. The consensus analysts’ estimate for gross margin was 57.7%, so Lululemon blew that out of the water with a gross margin of 58.3%.
Lululemon projects earnings per share of $2.85-$2.90 for Q2. Wall Street had been expecting EPS of $3.29 for the quarter.
Calvin McDonald, CEO of Lululemon, struck an optimistic tone on the company’s strategy even with a stark comparative environment before them.
“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.” – Calvin McDonald
The updated guidance arrives as Lululemon, like many other brands and retailers, responds to a changing economic environment that has forced changes in the way consumers are spending money. Over the past year, the company has doubled its efforts at expansion internationally while pivoting into a more efficient cost structure.
With regard to production, Lululemon has expanded its manufacturing locations. In 2024, that number jumped to 40% for those same products being manufactured in Vietnam. Cambodia 17%, Sri Lanka 11%, Indonesia 11%, Bangladesh 7%. This new approach to global production and distribution is intended to better manage supply chain resilience while responding to increasing consumer demand.
While Lululemon has downwardly adjusted its earnings guidance, it is still maintaining a solid fiscal buoyancy heading into 2025. The company expects revenue to land somewhere between $11.15 billion and $11.3 billion, in line with prior guidance.
These demands place immense pressure on the company to rapidly respond to market changes. This agility will continue to be essential for NFI to keep a strong financial position and capture future profitable growth. Investors should keep a close watch on Lululemon as it faces these headwinds in the quarters ahead. The firm clearly has every intent to continue to build that brand and grow its reach within the marketplace.