lululemon athletica inc.
For the period ended Nov 2, 2025. Filed Dec 11, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 2, 2025 · Filed Dec 11, 2025
LULU$110.79-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-08-03; filed 2025-09-04.
0001397187-25-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverviewFinancial Highlights and Market Conditions and TrendsQuarter-to-Date Results of OperationsYear-to-Date Results of OperationsComparable SalesNon-GAAP Financial MeasuresSeasonalityLiquidity and Capital ResourcesCritical Accounting Policies and EstimatesOperating LocationsCurrent report: 10-Q
Period ended 2025-11-02; filed 2025-12-11.
0001397187-25-000055
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverviewFinancial Highlights and Market Conditions and TrendsQuarter-to-Date Results of OperationsYear-to-Date Results of OperationsComparable SalesNon-GAAP Financial MeasuresSeasonalityLiquidity and Capital ResourcesCritical Accounting Policies and EstimatesOperating LocationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 195 previous paragraphs and 194 current paragraphs.
98 unchanged; 73 reworded; 21 added; 22 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 27 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
–Americas comparable sales decreased 5%.
Current report
•Gross profit increased 2% to $1.4 billion.
Current report
•Income from operations decreased 11% to $435.9 million.
Current report
Other Factors Affecting Our Business
Current report
The OBBBA includes, among other provisions, the permanent extension of certain provisions of the Tax Cuts and Jobs Act, the reinstatement of 100% bonus depreciation, the immediate expensing of qualifying research and development costs, and modifications to the international tax framework including changes to global intangible low-tax income, the base erosion and anti-abuse tax, and foreign derived intangible income. Based on our current evaluation of the legislation, we do not expect these tax law changes to have a material impact on our consolidated financial statements. We will continue to assess the potential impacts of OBBBA as additional regulatory guidance becomes available.
Current report
Quarter-to-Date Results of Operations: Third Quarter Results
Current report
–a net decrease of 290 basis points primarily from higher tariffs as well as markdowns and credit card affiliate programs, partially offset by higher pricing and lower product costs; and
Current report
–an increase in technology costs of $5.2 million; and
Current report
–a net decrease in employee costs of $7.7 million primarily due to decreased incentive compensation, partially offset by increased salaries and wages expense;
Current report
–a decrease in other head office costs of $0.3 million.
Current report
The decrease in gross margin was primarily due to lower product margin as well as higher occupancy costs and depreciation as a percentage of net revenue.
Current report
The increase in selling, general and administrative expenses was primarily due to increased employee costs, variable costs, and depreciation.
Current report
The increase in selling, general and administrative expenses was primarily due to increased marketing expenses, employee costs, variable costs, and technology costs.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs and other operating and head office costs.
Current report
The increase in the effective tax rate was primarily due to adjustments upon the filing of income tax returns.
Current report
–an increase in technology costs of $10.9 million; and
Current report
–an increase in other head office costs of $9.2 million; and
Current report
The decrease in gross margin was primarily due to lower product margin as well as higher occupancy costs and depreciation as a percentage of net revenue.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, marketing expenses, depreciation, and professional fees.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, marketing expenses, variable costs, and technology costs.
Current report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, marketing expenses, and variable costs.
Removed paragraphs (22)
Previous report
•Comparable sales increased 1%.
Previous report
–Americas comparable sales decreased 4%, or 3% on a constant dollar basis.
Previous report
•Gross profit increased 5% to $1.5 billion.
Previous report
•Income from operations decreased 3% to $523.8 million.
Previous report
Foreign Currency Fluctuations
Previous report
Quarter-to-Date Results of Operations: Second Quarter Results
Previous report
–an increase in distribution center and product department costs of 10 basis points.
Previous report
–an increase in technology costs of $3.0 million.
Previous report
–an increase in other head office costs of $5.3 million; and
Previous report
The increase in selling, general and administrative expenses was partially offset by an increase in net foreign currency exchange and derivative revaluation gains of $0.3 million.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, increased digital marketing expenses, and increased depreciation.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, increased digital marketing expenses, and increased technology costs.
Previous report
The decrease in gross margin was primarily due to higher occupancy costs as a percentage of net revenue as well as lower product margin.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs and increased marketing expenses, as well as increased distribution costs and credit card fees driven by higher net revenue.
Previous report
–a net increase of 20 basis points from lower damages, as well as lower product costs and higher pricing, partially offset by higher markdowns, freight costs, and tariffs; and
Previous report
–an increase in technology costs of $5.6 million; and
Previous report
–an increase in employee costs of $1.3 million primarily due to increased salaries and wages expense, partially offset by a reversal of stock-based compensation expense due to change in the probability of achieving performance conditions; and
Previous report
–an increase in other head office costs of $9.5 million.
Previous report
The decrease in gross margin was primarily due to higher occupancy costs and depreciation as a percentage of net revenue.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs, increased digital marketing expenses, and higher depreciation, partially offset by decreased distribution cost rates.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs and increased digital marketing expenses, as well as increased distribution costs and packaging costs driven by higher net revenue.
Previous report
The increase in selling, general and administrative expenses was primarily due to higher employee costs and increased marketing expenses, as well as increased distribution costs and credit card fees driven by higher net revenue.
Reworded paragraphs (73)
Previous wording
Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2025 will end on February 1, 2026 and will be a 52-week year. Fiscal 2024 was a 53-week year and ended on February 2, 2025. Fiscal 2025 and fiscal 2024 are referred to as "2025," and "2024," respectively. The first two quarters of 2025 and 2024 ended on August 3, 2025 and July 28, 2024, respectively.
Current wording
Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2025 will end on February 1, 2026 and will be a 52-week year. Fiscal 2024 was a 53-week year and ended on February 2, 2025. Fiscal 2025 and fiscal 2024 are referred to as "2025," and "2024," respectively. The first three quarters of 2025 and 2024 ended on November 2, 2025 and October 27, 2024, respectively.
Previous wording
We use comparable sales as a metric to evaluate the performance of our business. Due to the 53rd week in 2024, comparable sales are calculated on a one-week shifted basis such that the 13 or 26 weeks ended August 3, 2025 is compared to the 13 or 26 weeks ended August 4, 2024 rather than July 28, 2024. Refer to the Comparable Sales section of this MD&A for further information.
Current wording
We use comparable sales as a metric to evaluate the performance of our business. Due to the 53rd week in 2024, comparable sales are calculated on a one-week shifted basis such that the 13 or 39 weeks ended November 2, 2025 is compared to the 13 or 39 weeks ended November 3, 2024 rather than October 27, 2024. Refer to the Comparable Sales section of this MD&A for further information.
Previous wording
The summary below compares the second quarter of 2025 to the second quarter of 2024:
Current wording
The summary below compares the third quarter of 2025 to the third quarter of 2024:
Previous wording
•Net revenue increased 7% to $2.5 billion. On a constant dollar basis, net revenue increased 6%.
Current wording
•Net revenue increased 7% to $2.6 billion.
Previous wording
–China Mainland comparable sales increased 17%, or 16% on a constant dollar basis.
Current wording
–China Mainland comparable sales increased 24%, or 25% on a constant dollar basis.
Previous wording
–Rest of World comparable sales increased 12%, or 9% on a constant dollar basis.
Current wording
–Rest of World comparable sales increased 9%.
Previous wording
•Gross margin decreased 110 basis points to 58.5%.
Current wording
•Gross margin decreased 290 basis points to 55.6%.
Previous wording
•Operating margin decreased 210 basis points to 20.7%.
Current wording
•Operating margin decreased 350 basis points to 17.0%.
Previous wording
•Income tax expense decreased 2% to $162.6 million. Our effective tax rate for the second quarter of 2025 was 30.5% compared to 29.6% for the second quarter of 2024.
Current wording
•Income tax expense decreased 12% to $134.9 million. Our effective tax rate for the third quarter of 2025 was 30.5% compared to 30.2% for the third quarter of 2024.
Previous wording
•Diluted earnings per share were $3.10 compared to $3.15 in the second quarter of 2024.
Current wording
•Diluted earnings per share were $2.59 compared to $2.87 in the third quarter of 2024.
Previous wording
While total net revenue increased across all regions in the second quarter of 2025, comparable sales in the Americas decreased 4%, or 3% on a constant dollar basis. We experienced lower conversion rates and store traffic in the Americas, partially reflective of economic uncertainty, lower consumer confidence, changes in discretionary spending, and certain product offerings experiencing lower demand.
Current wording
While total net revenue increased during the third quarter of 2025, net revenue in the Americas decreased 2% and comparable sales in the Americas decreased 5%. We experienced lower average order value, conversion rates, and store traffic in the Americas, partially reflective of economic uncertainty, lower consumer confidence, changes in discretionary spending, and certain product categories experiencing lower demand.
Previous wording
The United States also approved the One Big Beautiful Bill Act on July 4, 2025, which removed the de minimis exemption for low value shipments imported into the United States in 2027. On July 30, 2025, the President of the United States issued an executive order removing the de minimis exemption for all countries beginning August 29, 2025.
Current wording
The United States also approved the One Big Beautiful Bill Act ("OBBBA") on July 4, 2025, which removed the de minimis exemption for low value shipments imported into the United States in 2027. On July 30, 2025, the President of the United States issued an executive order removing the de minimis exemption for all countries beginning August 29, 2025.
Previous wording
These changes in the tariff landscape, including the de minimis removal, are expected to have a significant adverse effect on our business and results of operation. The countries from which we source the majority of our products are now subject to higher tariffs on imports into the United States. Further, the majority of our sales to U.S. e-commerce guests are currently fulfilled from distribution centers in Canada, and historically a significant proportion of these orders qualified for the de minimis exemption. The removal of this exemption increases the cost of fulfilling those orders. We are taking steps to mitigate the financial impact which includes vendor negotiations and selective price increases. These actions are not anticipated to fully offset the effect of higher tariffs and the removal of the de minimis exemption, and we anticipate a significant reduction in our gross margin and operating margin.
Current wording
These changes in the tariff landscape, including the de minimis removal, have a significant adverse effect on our business and results of operation. The countries from which we source the majority of our products are now subject to higher tariffs on imports into the United States. Further, the majority of our sales to U.S. e-commerce guests are currently fulfilled from distribution centers in Canada, and historically a significant proportion of these orders qualified for the de minimis exemption. The removal of this exemption increases the cost of fulfilling those orders. We are taking steps to mitigate the financial impact which includes vendor negotiations and selective price increases. These actions are not anticipated to fully offset the effect of higher tariffs and the removal of the de minimis exemption, and we anticipate a significant reduction in our gross margin and operating margin.
Previous wording
The impact of increased tariffs, net of mitigating activities, resulted in a reduction to gross profit for the first two quarters of 2025 of approximately $10 million. We estimate, based on the information available to us today, that increased tariffs, and the removal of the de minimis exemption, will reduce gross profit for 2025 by approximately $240 million, net of mitigation efforts.
Current wording
The impact of increased tariffs, net of mitigating activities, resulted in a reduction to income from operations for the first three quarters of 2025 of approximately $60 million. We estimate, based on the information available to us today, that increased tariffs, and the removal of the de minimis exemption, will reduce income from operations for 2025 by approximately $210 million, net of mitigation efforts.
Previous wording
Our updated forecasts, inclusive of the trends above, have resulted in changes in the probability of achieving performance conditions of performance-based restricted stock units. Therefore, we recognized a reversal of stock-based compensation expense of $26.3 million during the second quarter of 2025.
Current wording
Our updated forecasts, inclusive of the trends above, resulted in changes in the probability of achieving performance conditions of performance-based restricted stock units. Therefore, we recognized a reversal of stock-based compensation expense of $26.3 million during the second quarter of 2025.
Previous wording
Foreign currency fluctuations negatively impacted our financial results during the first two quarters of 2025, reducing net revenue growth by $10.7 million compared to the first two quarters of 2024, primarily due to the overall appreciation of the US dollar relative to the Canadian dollar. We expect ongoing exchange rate volatility to continue affecting our financial results.
Current wording
Foreign currency fluctuations negatively impacted our financial results during the first three quarters of 2025, reducing net revenue growth by $15.4 million compared to the first three quarters of 2024. We expect ongoing exchange rate volatility to continue affecting our financial results.
Previous wording
The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue. Americas net revenue also increased, and global comparable sales increased 1%.
Current wording
The increase in net revenue was primarily due to increased China Mainland and Rest of World net revenue, partially offset by decreased Americas net revenue. Global comparable sales increased 1%, or 2% on a constant dollar basis.
Previous wording
•a net decrease in product margin of 70 basis points, comprised of:
Current wording
•a net decrease in product margin of 300 basis points, comprised of:
Previous wording
•a net increase in other cost of sales as a percentage of net revenue of 40 basis points, comprised of:
Current wording
•a net decrease in other cost of sales as a percentage of net revenue of 10 basis points, comprised of:
Previous wording
–an increase in costs related to our product departments of 10 basis points.
Current wording
–a decrease in costs related to our product departments of 40 basis points; and
Previous wording
–an increase in occupancy and depreciation costs of 30 basis points; and
Current wording
–an increase in occupancy and depreciation costs of 30 basis points.
Previous wording
•an increase in costs related to our operating channels of $62.8 million, comprised of:
Current wording
•an increase in costs related to our operating channels of $66.7 million, comprised of:
Previous wording
–an increase in employee costs of $49.1 million primarily due to increased salaries and wages expense for retail employees, partially offset by decreased incentive compensation;
Current wording
–an increase in employee costs of $28.2 million primarily due to increased salaries and wages expense for retail employees;
Previous wording
–an increase in variable costs of $13.3 million primarily due to increased distribution costs, credit card fees, and packaging costs as a result of higher net revenue;
Current wording
–an increase in variable costs of $15.1 million primarily due to increased distribution costs and higher credit card fees as a result of higher net revenue;
Previous wording
–an increase in digital marketing costs of $20.5 million;
Current wording
–an increase in digital marketing expenses of $9.5 million;
Previous wording
–an increase in other operating costs of $11.7 million primarily due to increased depreciation and occupancy costs;
Current wording
–an increase in other operating costs of $8.7 million primarily due to increased depreciation and occupancy costs.
Previous wording
•a net increase in head office costs of $17.2 million, comprised of:
Current wording
•a net increase in head office costs of $9.7 million, comprised of:
Previous wording
–an increase in brand and community costs of $4.0 million;
Current wording
–an increase in brand and community expenses of $8.6 million;
Previous wording
–an increase in technology costs, including cloud computing amortization, of $9.0 million;
Current wording
–an increase in technology costs, including cloud computing amortization, of $6.4 million;
Previous wording
–an increase in depreciation of $5.4 million;
Current wording
–an increase in depreciation of $4.2 million;
Previous wording
–an increase in contractor, advisory, and professional services of $3.6 million;
Current wording
–a decrease in contractor, advisory, and professional services of $1.5 million; and
Previous wording
•an increase in net foreign currency exchange and derivative revaluation losses of $10.5 million.
Current wording
•an increase in net foreign currency exchange and derivative revaluation losses of $2.0 million.
Previous wording
The increase in Americas net revenue was primarily due to a $113.6 million increase from new or expanded company-operated stores and our other channels. We added 26 net new company-operated stores in the Americas since the second quarter of 2024, including 14 company-operated stores from the acquisition of the Mexico operations. Americas comparable sales decreased 3%, or 2% on a constant dollar basis, driven by lower conversion rates and reduced store traffic, partially offset by higher e-commerce traffic and an increase in average order value.
Current wording
The decrease in Americas net revenue was primarily due to a decrease in comparable sales, which decreased 5%. The decrease in comparable sales was primarily a result of a decrease in average order value, lower conversion rates, and reduced store traffic, partially offset by higher e-commerce traffic, which was partially driven by the impact of credit card affiliate programs. The decrease in comparable sales was partially offset by a $50.3 million increase from new or expanded company-operated stores and our other channels. We opened 11 net new company-operated stores in the Americas since the third quarter of 2024.
Previous wording
The increase in China Mainland net revenue was primarily due to a $75.8 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 new company-operated stores in China Mainland since the second quarter of 2024. The increase in China Mainland net revenue was also driven by an increase in comparable sales, which increased 12%. The increase in comparable sales was primarily a result of increased e-commerce traffic, partially offset by a decrease in average order value.
Current wording
The increase in China Mainland net revenue was primarily due to an increase in comparable sales, which increased 24%, or 25% on a constant dollar basis. The increase in comparable sales was primarily a result of increased e-commerce traffic, partially driven by the timing of Singles Day events, partially offset by a decrease in average order value. The increase in China Mainland net revenue was also driven by a $46.6 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 27 new company-operated stores in China Mainland since the third quarter of 2024.
Previous wording
The increase in Rest of World net revenue was primarily due to a $31.1 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened 10 new company-operated stores in Rest of World since the second quarter of 2024. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 12%, or 9% on a constant dollar basis. The increase in comparable sales was primarily a result of increased traffic, partially offset by a decrease in average order value.
Current wording
The increase in Rest of World net revenue was primarily due to a $35.1 million increase in net revenue from new or expanded company-operated stores and our other channels. We have opened nine net new company-operated stores in Rest of World since the third quarter of 2024. The increase in Rest of World net revenue was also driven by an increase in comparable sales, which increased 9%. The increase in comparable sales was primarily a result of increased traffic.
Previous wording
The decrease in gross margin was primarily due to lower product margin and higher occupancy costs and depreciation as a percentage of net revenue.
Current wording
The decrease in gross margin was primarily due to lower product margin and higher distribution center costs as a percentage of net revenue, partially offset by lower occupancy costs as a percentage of net revenue.
Previous wording
Corporate expenses increased $7.0 million to $329.3 million in the second quarter of 2025 compared to the second quarter of 2024. The net increase was primarily due to higher technology costs and depreciation. The increase in corporate expenses was partially offset by lower employee costs driven by decreased incentive compensation as well as an increase in net foreign currency exchange and derivative gains of $0.3 million.
Current wording
Corporate expenses decreased $4.1 million to $339.6 million in the third quarter of 2025 compared to the third quarter of 2024. The net decrease was primarily due to lower employee costs driven by decreased incentive compensation as well as lower professional fees. The decrease in corporate expenses was partially offset by higher technology costs, depreciation, marketing expenses, as well as an increase in net foreign currency exchange and derivative losses of $2.0 million.
Previous wording
The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $79.7 million, and a decrease in other income (expense), net of $8.3 million, partially offset by an increase in gross profit of $65.0 million, and a decrease in income tax expense of $2.7 million.
Current wording
The decrease in net income was primarily due to an increase in selling, general and administrative expenses of $78.4 million and a decrease in other income (expense), net of $7.9 million, partially offset by an increase in gross profit of $24.3 million, and a decrease in income tax expense of $17.6 million.
Previous wording
Year-to-Date Results of Operations: First Two Quarters Results
Current wording
Year-to-Date Results of Operations: First Three Quarters Results
Previous wording
•a net increase in product margin of 10 basis points, comprised of:
Current wording
•a net decrease in product margin of 90 basis points, comprised of:
Showing the first 40 of 73 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•Comparable sales increased 1%, or 2% on a constant dollar basis.
Current report — wording carried from elsewhere
•an increase in net foreign currency exchange and derivative revaluation losses of $12.5 million.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The increase in the effective tax rate was primarily due to an increase in non-deductible expenses in international jurisdictions.
Previous report — wording carried elsewhere
–an increase in occupancy and depreciation costs of 30 basis points; and