Lululemon trading higher after posting better-than-expected Q3 results, with CEO set to exit in January
Lululemon was up more than 9% in premarket trading after the athleisure brand yesterday posted better-than-expected Q3 results, lifted its full-year outlook, and announced the departure of its CEO following over a year of slowing sales growth.
In the third quarter, net revenue increased 7% year over year to $2.57 billion, topping the $2.48 billion estimate compiled by LSEG, while earnings per share of $2.59 also beat expectations of $2.25. The results were driven largely by international markets, where comparable sales rose 18%, offsetting a 5% decline in the Americas.
The company also raised its full-year revenue guidance to $10.96 billion to $11.05 billion, roughly in line with expectations at the lower end, per LSEG as reported by CNBC. Management reiterated that tariffs — including the end of the US de minimis exemption — are expected to cut 2025 operating income by $210 million, down from the previous $240 million hit the company had projected in September, thanks to vendor negotiations and other cost-saving efforts.
Still, the company’s Q4 revenue and earnings guidance fell short of Wall Street estimates.
In a separate release, the Vancouver-based company announced CEO Calvin McDonald will step down at the end of January after seven years at the helm. Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs while the board searches for a permanent successor.
McDonald’s exit follows prolonged weakness in the brand’s core US business amid rising competition from brands like Alo Yoga and Vuori — as well as public criticism from founder Chip Wilson, who has argued the brand has lost its creative edge under the current leadership.
One visible difference versus newer rivals is marketing intensity, where Lululemon spends just 5% of its revenue. In yesterday’s earnings call, executives said Lululemon plans to step up marketing spend in the fourth quarter and into next year to drive traffic and build brand awareness.
Despite this morning’s rally, shares remain down more than 45% year to date.
Still, the company’s Q4 revenue and earnings guidance fell short of Wall Street estimates.
In a separate release, the Vancouver-based company announced CEO Calvin McDonald will step down at the end of January after seven years at the helm. Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini will serve as interim co-CEOs while the board searches for a permanent successor.
McDonald’s exit follows prolonged weakness in the brand’s core US business amid rising competition from brands like Alo Yoga and Vuori — as well as public criticism from founder Chip Wilson, who has argued the brand has lost its creative edge under the current leadership.
One visible difference versus newer rivals is marketing intensity, where Lululemon spends just 5% of its revenue. In yesterday’s earnings call, executives said Lululemon plans to step up marketing spend in the fourth quarter and into next year to drive traffic and build brand awareness.
Despite this morning’s rally, shares remain down more than 45% year to date.
