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Lululemon Continues to Be in Transition

publication date: Jan 10, 2026
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Image Souce: Lululemon. 

In the third quarter, Lululemon's gross profit increased 2%, to $1.4 billion, but gross margin fell 290 basis points to 55.6%. Income from operations fell 11% to $435.9 million, while its operating margin dropped 350 basis points, to 17%. Lululemon ended the third quarter with $1.0 billion in cash and cash equivalents and $593 million under its revolver. Inventories at the end of the third quarter increased 11%, to $2 billion. For 2025, Lululemon expects net revenue to be in the range of $10.962-$11.047 billion, representing growth of 4%, or 5%-6% excluding the 53rd week of 2024. Diluted earnings per share are now expected to be in the range of $12.92-$13.02 for the year, above consensus of $12.86. Lululemon continues to be in transition with a new CEO expected in 2026. We remain on the sidelines.


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