Lululemon: Strong Q4 growth, but US headwinds temper outlook

Yoga wear brand Lululemon reported a strong fourth-quarter revenue surge, fuelled by international expansion and omni-channel performance, yet its forward-looking projections signalled caution amidst potential macroeconomic headwinds, particularly in the US.

Fourth-quarter revenue in fiscal year 2024, climbed 16 percent to 3.2 billion dollars, exceeding Wall Street estimates. However, the company's full-year forecast of 10.7 billion dollars to 10.8 billion dollars in net revenue and 14 dollars to 14.20 dollars in diluted earnings per share fell below consensus expectations, indicating a tempered outlook.

Lululemon new revenue beats expectations

For the first quarter of 2025, Lululemon anticipates net revenue between 2.375 billion dollars and 2.4 billion dollars, a roughly 16 percent increase, again below analysts’ expectations. Diluted earnings per share are projected between 2.20 dollars and 2.25 dollars.

CEO Calvin McDonald cited geopolitical conflicts and high inflation as factors causing US consumers to reduce spending and store visits. The company also noted that tariffs on goods from China and Mexico could slightly impact profit margins.

To mitigate the impact of the above factors, the Vancouver-based company plans to introduce new product categories such as golf, tennis, and running gear.

Lululemon’s fourth quarter revenue increase was driven by a 29 percent jump in international sales and a 12 percent rise in North American revenue. Comparable sales grew 12 percent, and direct-to-consumer revenue increased by 17 percent. Net income reached 669.3 million dollars, a 26.3 percent increase from the prior year's fourth quarter.

"We finished 2024 strong, delivering double-digit revenue growth and margin expansion in the fourth quarter," said McDonald, highlighting the company's recent performance, while the forward looking projections show an acknowledgment of difficult times ahead.