Lululemon Athletica Inc. expects only modest growth in its U.S. business in 2025 as shoppers appreciate the company’s fresh product introductions but remain cautious about the broader economy. Chief Executive Calvin McDonald said the retailer’s own polling with Ipsos shows many U.S. customers are dialing back spending because of worries about inflation and economic conditions.
McDonald said these concerns are contributing to slower foot traffic across the U.S. apparel and athleisure industry in the first quarter, a trend Lululemon has also observed. At the same time, he noted that guests who do visit stores or shop online tend to respond positively to the newness and innovations the company has introduced to its assortment.
“We are focused on controlling what we can control,” McDonald said, adding that the company expects modest U.S. revenue growth for the full year of 2025 as a result of these efforts.
Tariffs make U.S. consumers more cautious
Chief Financial Officer Meghan Frank pointed out that the caution seen among U.S. shoppers has not been as apparent in the other regions where Lululemon operates. The Vancouver-based retailer is forecasting overall revenue growth in the range of 6% to 7% for the first quarter of fiscal 2025.
Frank also said that the company’s 2025 guidance incorporates the potential effects of U.S. tariffs on its trading partners, particularly for imports originating in China and Mexico. Management said it will continue to review its cost structure and pricing strategy and make adjustments should the external environment change.
The company noted that U.S. President Donald Trump has enacted tariffs on Chinese imports and imposed tariffs on certain goods from Mexico in early March, with many of those measures temporarily paused for a month. Lululemon has taken those trade developments into account as it plans inventory flows and sourcing strategies.
Lululemon Q4 earnings
When markets closed on Thursday, Lululemon reported fourth-quarter net income of $748.4 million, up from $669.5 million in the same period a year earlier. Earnings amounted to $6.14 per diluted share, compared with $5.29 per diluted share in the fourth quarter of 2023.
Net revenue for the quarter ended Feb. 2 was $3.61 billion, versus $3.21 billion a year earlier. Those results beat the guidance Lululemon issued in January, when the company had anticipated diluted earnings per share of $5.81 to $5.85 and revenues as high as $3.58 billion.
For the full year 2024, Lululemon reported net income of $1.81 billion, or $14.64 per diluted share, up from $1.55 billion, or $12.20 per diluted share the prior year. Annual revenues rose to $10.59 billion from $9.62 billion, reflecting continued growth despite pockets of softness in certain markets.
How Lululemon is striving to attract customers
McDonald emphasized that “newness” remains a core strategy for bringing customers into stores and driving engagement online. Newness, he explained, includes a range of product updates such as fresh colors, prints, patterns and silhouettes, as well as collaborations with celebrities and partner brands that can capture consumer interest.
This year, Lululemon has introduced several highlighted items intended to broaden its appeal. McDonald pointed to the Glow Up workout collection, which the company describes as offering a smooth, sculpted fit, and Day Drift casual trousers touted for superior comfort and versatility—styles the company believes could evolve into new core franchises.
“In quarter one, we have maintained an elevated level of newness,” McDonald said. He added that this increased pace of product introductions, combined with a robust pipeline of innovation, will help the company meet guests’ expectations even as traffic patterns shift.
Management’s balanced approach—pursuing product innovation while monitoring costs and pricing—reflects a plan to navigate the mixed signals the market is sending: encouraging consumer response to new products, alongside broader caution tied to inflation, tariffs and the macroeconomic outlook.
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