Lululemon Athletica — Income Statement, Cash Flows & Balance Sheet
Is lululemon profitable?
lululemon grew revenue but saw meaningful profit compression, largely due to tariff costs.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Net revenue | $10,588M | $11,103M | +5% |
| Gross profit | $6,271M | $6,284M | +0.2% |
| Gross margin | 59.2% | 56.6% | −260 bps |
| Income from operations | $2,506M | $2,211M | −12% |
| Operating margin | 23.7% | 19.9% | −380 bps |
| Diluted EPS | $14.64 | $13.26 | −9% |
Revenue rose a healthy 5%, but almost all of that topline gain was eaten up by higher costs. The culprit was primarily tariffs and the elimination of the U.S. de minimis duty exemption (which previously allowed many small shipments to enter the U.S. duty-free), which reduced gross profit by roughly $275 million on an unmitigated basis. Margins fell sharply as a result, and the bottom line declined despite the company's overall growth.
An executive leadership transition added one-time costs that also weighed on results.
| Item | FY2025 |
|---|---|
| Executive transition costs | $15.2M |
| Proxy contest costs | $5.1M |
| SG&A as % of net revenue | 36.6% vs. 35.5% prior year |
lululemon's CEO stepped down at the end of the fiscal year, and the company incurred transition and proxy-related expenses. These are one-time in nature and do not reflect the ongoing cost structure of the business.
Where does lululemon's revenue come from?
International growth is surging while the Americas — the core business — is stagnating.
| Segment | FY2024 Revenue | FY2025 Revenue | Change |
|---|---|---|---|
| Americas | $7,928M | $7,847M | −1% |
| China Mainland | $1,361M | $1,755M | +29% |
| Rest of World | $1,299M | $1,501M | +16% |
| Total | $10,588M | $11,103M | +5% |
The Americas, which still accounts for roughly 71% of total revenue, declined slightly as lower store traffic, weaker conversion rates, and tariff-driven margin pressure took hold. Meanwhile, China Mainland and the Rest of World drove all of the company's growth, with China Mainland comparable sales up 20%. International markets are clearly the engine right now.
The Americas segment's profitability fell dramatically, while China Mainland expanded margins.
| Segment | FY2024 Operating Margin | FY2025 Operating Margin | Change |
|---|---|---|---|
| Americas | 38.0% | 32.6% | −540 bps |
| China Mainland | 37.5% | 40.0% | +250 bps |
| Rest of World | 24.3% | 23.0% | −130 bps |
The contrast is stark: Americas profitability dropped sharply due to tariffs and markdowns, while China Mainland actually became more profitable as it scaled. This divergence is an important dynamic to watch — the company's most profitable region is shrinking its margins while a smaller but fast-growing region is expanding them.
Does lululemon generate cash?
lululemon generates substantial cash from operations, though the amount fell this year.
| Cash Flow Item | FY2024 | FY2025 | Change |
|---|---|---|---|
| Operating cash flow | $2,273M | $1,602M | −$671M |
| Capital expenditures | $689M | $681M | −$8M |
| Free cash flow (GAAP operating CF minus capex) | $1,584M | $921M | −$663M |
The business still produces well over $900 million in free cash flow (operating cash flow less capital spending), but the decline from the prior year is notable. The drop was driven by lower net income and the timing of tax payments, not a structural deterioration in the business model.
lululemon returned over $1 billion to shareholders through buybacks.
| Capital Allocation | FY2024 | FY2025 |
|---|---|---|
| Shares repurchased | 5.1M shares / $1.6B | 5.0M shares / $1.2B |
| Remaining buyback authorization | — | $1.4B |
The company has been consistently returning cash to shareholders rather than paying dividends. With $1.4 billion still authorized for repurchases and a strong cash balance, it retains flexibility to continue.
How strong is lululemon's balance sheet?
lululemon carries no debt and holds nearly $1.8 billion in cash.
| Balance Sheet Item | FY2024 | FY2025 |
|---|---|---|
| Cash and equivalents | $1,984M | $1,807M |
| Total debt | $0 | $0 |
| Revolving credit facility (undrawn) | — | $594M available |
| Working capital (current assets minus current liabilities) | — | $2,375M |
The balance sheet is notably clean. There is no long-term debt, and the company has access to an additional $594 million credit line it has not needed to draw on. This financial strength provides a meaningful buffer against ongoing tariff headwinds.
Inventory is rising, which warrants monitoring.
| Item | FY2024 | FY2025 | Change |
|---|---|---|---|
| Inventories | $1,442M | $1,701M | +18% |
| Revenue growth | — | — | +5% |
Inventory grew at more than three times the rate of revenue, meaning lululemon is holding more product relative to sales. Management expects inventory to grow in the mid-single digits by end of fiscal 2026, with unit counts slightly decreasing — suggesting they expect to work through the current build. Elevated inventory can lead to markdowns if demand doesn't keep pace.