Lululemon releases 2025 financial report, "A Song of Ice and Fire" behind billion-dollar revenue | Corporate public sentiment alert

Just yesterday, Canadian sports lifestyle brand lululemon released its 2025 earnings report. This financial statement, covering up to February 1, 2026, not only shows a milestone of over $11.1 billion in global net revenue but also reveals a “cold snap” in its home market of North America.

Global revenue surpasses $11 billion for the first time, but the “money printer” is struggling

Let’s look at the overall picture. In fiscal year 2025, lululemon’s global net revenue grew by 5% year-over-year to $11.1 billion. For any retail brand, maintaining growth at a hundred-billion-dollar scale is no easy feat. However, behind this impressive total revenue, gross profit margin decreased by 260 basis points, and operating profit for the year declined by 12% compared to the previous year.

This means that although more people are buying, it has become significantly harder for the brand to make money.

Especially in the last quarter (the three months ending February 1, 2026), revenue of $3.6 billion barely exceeded market expectations, but in North America, revenue declined by 4% year-over-year. For investors accustomed to double-digit growth, this number was a cold shower.

lululemon releases 2025 financial report

So, who drove this 5% growth? The answer lies across the ocean.

In 2025, lululemon’s international business saw a 22% increase in net revenue year-over-year, with the China mainland market growing as high as 29%. Particularly in the fourth quarter, while North American consumers tightened their wallets, the China market still maintained a strong 24% growth.

By the end of the fiscal year, lululemon’s directly operated stores in China exceeded 170. More importantly, China’s share of the company’s total global net revenue rose from 13% last year to 16%.

Once known for a single yoga pant, what has lululemon captured in China? It’s not just yoga. According to the financial report, outerwear like the Wunder Puff series down jackets became popular last winter. This indicates that lululemon is trying to transform from a “brand for yoga wear” into a “lifestyle brand for everyday wear.”

If you follow lululemon’s movements, you’ll notice it is becoming more “savvy” in China.

During this year’s Spring Festival, lululemon released a new short film titled “Spring, Repeating Like New” and launched a limited edition Spring collection. This marketing approach, closely tied to local cultural moments, clearly resonates more with middle-class consumers than simply hiring celebrity endorsers.

As industry analysts point out, lululemon’s nearly 30% high growth in China is partly due to a well-developed offline channel layout, precisely capturing the domestic high-end sports and athleisure trends; on the other hand, the demand among Chinese women for high-quality, comfortable sportswear is rising.

Founder and CEO’s “internal struggle” more eye-catching than the financial report

For the upcoming fiscal year 2026, lululemon has provided new performance guidance: expected full-year net revenue between $11.35 billion and $11.5 billion, a growth of 2% to 4%.

In terms of stores, the plan is to open 40 to 45 new directly operated stores worldwide, most of which will be in China. This means China is not only the “engine” of growth but also the main battleground for store expansion.

However, challenges remain. Tariff issues are eroding profits. In fiscal year 2025, lululemon faced up to $275 million in tariff costs. Although some pressure was offset through supply chain adjustments, it is expected that this number will rise to $380 million in fiscal year 2026. This explains why, despite China’s rapid growth, the capital market’s reaction has been relatively lukewarm.

Interestingly, just before the earnings release, lululemon’s founder Chip Wilson publicly voiced concerns. He criticized the company’s reliance on discounts in North America to clear inventory, believing this damages the brand’s hard-earned high-end image.

This also explains why management repeatedly emphasizes “increasing the proportion of full-price sales” in their new fiscal year plans. In other words, they want to move away from relying on discounts, especially in North America.

To that end, lululemon also brought in “external help”—appointing Chip Bergh, former President and CEO of Levi’s, to join the board. Letting a denim veteran guide how to sell yoga pants certainly sparks imagination.

For lululemon, 2025 was a year of “squeezing out water” in the domestic market and “building muscle” in China. Although North America struggles in the discounting quagmire, the explosive growth of its international business, especially in China, gives this once niche yoga brand the confidence to continue upward.

In 2026, with more “copycat” brands emerging and the sports leisure track becoming more competitive, whether lululemon can make North American consumers willing to pay full price again will be key to maintaining its billion-dollar market value.

For Chinese consumers, good news is that the nearby lululemon store might soon reopen.