Lululemon sees more ‘modest’ growth in U.S. as consumers turn cautious

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This article was published 27/03/2025 (226 days ago), so information in it may no longer be current.

Lululemon Athletica Inc. is expecting modest growth in its U.S. business this year, with consumers pleased with the clothing retailer’s fresh offerings but cautious about the economy.

Chief executive Calvin McDonald told a quarterly conference call Thursday that the company has done some polling with Ipsos that suggests U.S. customers are spending less due to concerns about inflation and the economy.

“This is manifesting itself into slower traffic across the industry in the U.S. in quarter one, which we are experiencing in our business as well,” he said. 

“However, we see guests who visit us responding to the newness and innovations we’ve brought into our assortment … We are controlling what we can control and we expect to see modest growth in U.S. revenue for the full year of 2025.”

Chief financial officer Meghan Frank said that trend of consumer caution has not been apparent in other regions of the world where the retailer operates. 

The Vancouver-based clothing retailer said it expects overall revenue growth to be in the six to seven per cent range during the first quarter of fiscal 2025.

Frank said the impact of U.S. tariffs on its trading partners has been factored into the company’s 2025 guidance, particularly when it comes to imports from China and Mexico. 

“We’ll continue to look across our cost structure as well as to pricing, should the environment change,” she said. 

U.S. President Donald Trump has enacted tariffs on Chinese imports. He also levied tariffs against Mexico in early March, many of which which were put on pause for a month. 

On Thursday after markets closed, Lululemon reported fourth-quarter net income of US$748.4 million, up from US$669.5 million in the same period a year earlier. 

The company says the profits amounted to US$6.14 per diluted share, up from US$5.29 per diluted share in the fourth quarter of 2023. 

Net revenue was US$3.61 billion for the quarter ended Feb. 2 compared to US$3.21 billion a year earlier. 

The reported earnings and revenue beat the fourth-quarter guidance Lululemon released in January.

It previously said it expected diluted earnings per share to be between US$5.81 and US$5.85 and for revenues to be as high as US$3.58 billion. 

McDonald said the company is continuing to improve the brand’s “newness” — a key way to draw in customers by making products and styles appear fresh. 

Ways to boost newness include new colours, prints, patterns and silhouettes, as well as partnerships with celebrities and other brands. 

On the call, McDonald highlighted some new offerings this year, including the Glow Up workout gear line that he said offers a “smooth and sculpted fit,” as well as Day Drift casual trousers that have “superior comfort and versatility” and could become a new core franchise. 

“Looking at quarter one, we have increased our level of newness on par with the past,” said McDonald.

“We believe this increase, along with a robust pipeline of innovation, will enable us to meet the expectations of our guests.” 

For all of 2024, the company had net income of US$1.81 billion, or US$14.64 per diluted share, up from US$1.55 billion, or US$12.20 per diluted share. 

Full-year revenues were US$10.59 billion, up from US$9.62 billion. 

This report by The Canadian Press was first published March 27, 2025.

Companies in this story: (NASDAQ: LULU)