Lululemon (LULU) Stock: Drops as Repurchase and Positive Outlook Propel Confidence

TLDR:

• Lululemon’s Q3 revenue up 7%, driven by 33% international growth.
• Strong international sales offset U.S. revenue dip in Lululemon’s Q3.
• Lululemon repurchases $189M in shares, boosting market confidence.
• Q3 net revenue hits $2.6B, with international growth leading the charge.
• Lululemon expects continued international success in 2026 despite challenges.

Lululemon Athletica Inc. (NASDAQ: LULU) reported strong results for Q3 of fiscal 2025, despite challenges in its U.S. operations. The company’s net revenue for the quarter reached $2.6 billion, a 7% increase compared to the same period last year. The positive performance is largely attributed to the growth in international markets, with a notable 33% increase in international revenue.LULU closed at $187.01, down by 0.33%.

Lululemon Athletica Inc., LULU

Strong International Growth Drives Revenue Performance

Lululemon’s international business continues to outperform expectations. The company saw a significant 33% increase in international net revenue, showcasing the success of its global expansion strategy. In contrast, the Americas region experienced a decline, with net revenue falling by 2%.

Comparable sales also mirrored this split. International comparable sales rose by 18%, while sales in the Americas decreased by 5%. Despite this, the company reported a modest overall comparable sales growth of 1%, or 2% on a constant dollar basis.

Lululemon’s commitment to strengthening its global presence remains evident. As it shifts focus to its international markets, the company expects continued growth and strategic improvements in 2026.

Stock Repurchase Program Boosts Market Confidence

Lululemon’s stock repurchase program has further fueled confidence in its prospects. The company repurchased 1.0 million shares for $189.0 million during Q3. This move comes alongside an increase in the stock repurchase authorization by the board of directors. The new authorization, which totals $1.0 billion, signals the company’s optimism about its long-term growth potential.

The repurchase plan demonstrates Lululemon’s strong financial position. The company’s management has shown a clear commitment to returning value to shareholders. It reflects their belief in the strength of the brand and their confidence in its performance moving forward.

With $1.0 billion in cash and cash equivalents, along with ample access to credit, Lululemon is well-positioned for further investments and continued share repurchases. The board’s decision to approve the increase highlights its confidence in the company’s ability to navigate market challenges.

Improved Financials Amid Operational Challenges

Lululemon’s financial results reflect overall positive progress. Gross profit for the third quarter of 2025 increased by 2%, reaching $1.4 billion. However, the company’s gross margin did see a dip of 290 basis points, falling to 55.6%.

Lululemon’s operating income decreased by 11%, but the company remains optimistic about its ability to execute its strategic plan. The lower operating margin resulted from rising operational costs and market conditions, but the company remains committed to improving these areas. Lululemon plans to address these challenges through its ongoing action plan, aiming for better performance in 2026.

The company’s focus on strengthening both its domestic and international operations is expected to continue driving growth. With the holiday season approaching, early performance indicators suggest that Lululemon remains on track to meet its objectives for the remainder of the fiscal year.

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