The Canadian sportswear provider Lululemon Athletica Inc. was able to exceed its own forecasts for sales and profits in the fourth quarter of the 2025/26 financial year. However, the company continued to face a difficult retail environment in America, which led to declining results in its own stores and increased discount promotions.
In the fourth quarter, which ended February 1, sales were $3.64 billion (3.16 billion euros). This exceeded the level of the same period last year by one percent. Excluding the 53rd week of sales in the previous financial year, sales increased by six percent.
However, the company faced significant headwinds in its home markets. Net sales in the Americas fell four percent, while comparable sales in the region fell one percent.
The priority for the current fiscal year is now “improving our full-price sales, particularly in North America,” explained interim Co-CEO and Chief Financial Officer (CFO) Meghan Frank. “This will enable us to strengthen our brand health and achieve long-term growth and value creation for our shareholders.”
International expansion offsets slowdown in the domestic market
The group’s global business provided a necessary buffer against the slowdown in North America. International sales increased by 17 percent (currency-adjusted + 14 percent). On a comparable basis, international sales rose by 20 percent in the final quarter.
In the entire 2025/26 financial year, sales reached 11.1 billion US dollars (9.6 billion euros). This corresponds to an increase of five percent year-on-year.
Despite the sales growth, earnings came under pressure. Gross margin fell 260 basis points year-on-year to 56.6 percent. The operating result shrank by twelve percent to 2.20 billion US dollars, the net profit fell by 13 percent to 1.58 billion US dollars (1.37 billion euros). Diluted earnings per share, which were $14.64 a year ago, decreased to $13.26.
Lululemon brings former Levi Strauss CEO Chip Bergh to its board of directors
To strengthen its retail capabilities, Lululemon has appointed Chip Bergh to its Board of Directors, effective immediately. Bergh was President and CEO of the US denim giant Levi Strauss & Co. from 2011 to 2024. He replaces David Mussafer, who will not stand for re-election at the 2026 annual general meeting.
Marti Morfitt, Lululemon’s Executive Chair, stated, “Chip Bergh is an industry leader with a proven track record of successful transformations. We believe the Board will benefit from his extensive brand and retail expertise.”
The appointment came amid the ongoing search for a permanent CEO. Since Calvin McDonald’s resignation, Meghan Frank and Chief Commercial Officer and President André Maestrini have led the company as interim co-CEOs.
Investors express concerns
The presentation of the current results was preceded by a critical statement from Lululemon founder and major shareholder Chip Wilson. Wilson had raised concerns about the company’s “creative power” and its reliance on discounts to clear inventory in the U.S. and Canada.
During the quarterly earnings call, investors and analysts asked the leadership team about strategies to mitigate potential tariff increases and the timeline for improving full-price sales. Frank emphasized that improving full-price sales is a “key priority” for the current fiscal year, particularly to protect brand health in North America.
Management forecasts sales growth
For the first quarter of 2026, the company forecasts net sales between $2.40 billion and $2.43 billion. This corresponds to a growth rate of one to three percent. For the full year, Lululemon expects revenue between $11.35 billion and $11.50 billion. This corresponds to growth of two to four percent. Diluted earnings per share for the year are expected to be in the range of $12.10 to $12.30.
The company ended the last financial year with 811 of its own branches, after opening a net 44 new locations in 2025.
Management says it remains focused on accelerating time to market and maintaining quality standards. Wilson recently criticized the product offerings for previous seasons as “stale and predictable.”
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