Lululemon Athletica Inc. (LULU) kicked off the week with an encouraging update: the athleisure retailer is raising its fourth-quarter expectations after what management describes as strong holiday execution.
The company now expects net revenue to land near the top of its previously announced $3.50 billion to $3.585 billion range. That's good news compared to earlier projections, though it's worth noting the figure still comes in below the $3.595 billion consensus estimate analysts had been penciling in.
Similarly, diluted earnings per share are projected toward the upper end of the $4.66 to $4.76 range, which trails the $5.05 analyst estimate but represents an improvement from where Lululemon thought it would land just a few months ago.
The company kept its outlook for gross margin, selling, general, and administrative expenses, and effective tax rate unchanged, suggesting the revenue beat came from execution rather than cost-cutting surprises.
CFO Points to Turnaround Efforts
CFO Meghan Frank emphasized that the company is actively working to revive its struggling U.S. business. "Based on our performance over the holiday period, we expect to achieve the higher end of our previously communicated fourth quarter net revenue and EPS guidance," Frank said. "We remain focused on executing our action plan to drive improvement in our U.S. business and look forward to the opportunities in front of us."
The timing of this update is notable. The guidance raise comes amid mounting boardroom pressure as Lululemon searches for a new CEO, with the company's founder reportedly pushing for leadership changes at the board level.
Management is scheduled to meet with analysts and investors at the ICR Conference from January 12 to 14, 2026, where they'll likely face questions about both the business turnaround and the ongoing leadership transition.
International Strength Masks Domestic Struggles
The holiday improvement builds on a solid third quarter, where Lululemon topped earnings and revenue estimates. Revenue increased 7% year over year in Q3, but the story beneath the surface was all about geography: international revenue surged 33%, while the U.S. business continued to face headwinds.
That split-screen performance has become the defining narrative for Lululemon lately. The brand is thriving in new markets even as it works to recapture momentum at home.
For the full fiscal 2025, the company raised its outlook to GAAP EPS of $12.92 to $13.02 and revenue of $10.96 billion to $11.05 billion.
LULU Price Action: Lululemon shares were up 1.77% at $207.51 at the time of publication on Monday.
