— Lululemon reported second-quarter results that beat EPS estimates but missed revenue projections, then cut its full-year guidance after warning that higher tariffs and the removal of the de minimis exemption will shave roughly $240 million from annual profits; the stock fell more than 12% in after-hours trading.
Key Takeaways
- Q2 EPS of $3.10 exceeded expectations of $2.88; revenue was $2.53 billion vs. $2.54 billion expected.
- Lululemon reduced FY25 EPS guidance to $12.77–$12.97, below the $14.45 consensus.
- Full-year revenue forecast trimmed to $10.85–$11.00 billion versus $11.18 billion expected.
- The company estimates tariffs and related changes will cut profits by about $240 million for the year; the de minimis removal accounts for ~1.7 percentage points of the 2.2-point tariff-related profit hit.
- Gross margin fell 1.1 percentage points to 58.5%; operating margin declined 210 basis points to 20.7%.
- Comparable sales rose 1% overall but same-store sales in the Americas dropped 4%; Lululemon added 14 net stores in Q2, totaling 784.
Verified Facts
Lululemon posted net income of $370.9 million, or $3.10 per share, for the quarter ended in Q2 2025, compared with net income of $392.92 million, or $3.15 per share, in the year-ago period. The company slightly missed revenue expectations: $2.53 billion versus $2.54 billion as surveyed by LSEG.
| Metric | Lululemon Q2 2025 | Wall Street Estimate |
|---|---|---|
| Earnings per share | $3.10 | $2.88 |
| Revenue | $2.53 billion | $2.54 billion |
For the full fiscal year, management now expects EPS of $12.77 to $12.97 and revenue between $10.85 billion and $11.00 billion. Those ranges sit well below analyst consensus of $14.45 per share and $11.18 billion in revenue, respectively, which prompted a swift negative reaction in the stock market.
Management quantified the tariff impact at roughly $240 million for the year. CFO Meghan Frank said the elimination of the de minimis exemption—which previously exempted certain low-value shipments from tariffs—represents about 1.7 percentage points of the total 2.2 percentage-point drag on profit tied to tariff changes.
Context & Impact
The tariff-driven guidance cut compounds other pressures on the retailer: margins contracted, and U.S. product categories such as lounge and socialwear underperformed. CEO Calvin McDonald identified longer product lifecycles and predictability in casual offerings as underlying problems that limited demand in the U.S.
Outlook for the next quarter also disappointed: revenue is forecast at $2.47–$2.50 billion (consensus $2.57 billion) and EPS is expected at $2.18–$2.23 (consensus $2.93). Investors interpreted the gap between guidance and expectations as a signal of weaker near-term top-line momentum.
- Short-term: lower margins and reduced earnings guidance tightened investor confidence, driving a >12% after-hours drop and contributing to a year-to-date share decline of more than 45%.
- Medium-term: the company plans to accelerate product refreshes and increase the share of new styles to 35% of assortment by next spring to regain U.S. momentum.
Official Statements
“The increased rates and removal of the de minimis provisions have played a large part in our guidance reduction for the year,”
Calvin McDonald, CEO
“The de minimis change represents roughly 1.7 percentage points of the 2.2-point tariff-related decline in profit we now expect,”
Meghan Frank, CFO
Unconfirmed
- Whether the $240 million estimate fully captures indirect or delayed effects of tariff policy changes beyond FY25.
- Timing and magnitude of revenue recovery if the planned product assortment changes accelerate demand in the U.S.
Bottom Line
Lululemon delivered mixed operational results: an EPS beat was overshadowed by a revenue miss, margin pressure and an unexpectedly large tariff headwind that led management to cut full-year guidance. The company has outlined product and design changes to restore growth, but investors will be watching next-quarter sales and margins to gauge whether those fixes and macro policies will allow the brand to regain momentum.