AI Takeaway
lululemon athletica's FY2025 10-K reveals revenue grew 4.9% to $11.1B, but profitability deteriorated sharply as gross margin contracted 260bps to 56.6% and net income fell 13.0% to $1.58B amid rising costs and elevated SG&A spending.
Revenue
$11.1B
++4.86% YoY
EPS (Basic)
$13.27
-9.54% YoY
Gross Margin
56.6%
-2.62% YoY
Operating Income
$2.21B
-11.78% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-K filing
Total revenue increased 4.9% YoY to $11.1B in FY2025, a notable deceleration compared to prior periods, while cost of revenue surged 11.6% to $4.82B — outpacing revenue growth and compressing gross profit to just $6.28B (+0.2% YoY), signaling significant cost headwinds.
Source: Source: 10-K Income Statement
SG&A expenses rose 8.1% to $4.07B, growing faster than revenue, which drove operating income down 11.8% to $2.21B and compressed the operating margin by approximately 375bps to 19.9% — a meaningful step-down in operational efficiency.
Source: Source: 10-K Income Statement
Net income fell 13.0% to $1.58B and diluted EPS dropped 9.4% to $13.26 (from $14.64), reflecting the combined impact of higher costs, lower operating leverage, and elevated spending across the business.
Source: Source: 10-K Income Statement
2 more insights available
Upgrade to unlockGross margin contracted 260bps to 56.6% in FY2025 as cost of revenue grew 11.6% versus revenue growth of only 4.9%. If input costs, supply chain expenses, or promotional activity continue to outpace pricing power, further margin erosion could materially impact profitability.
Source: Source: 10-K Income Statement
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Upgrade to unlock| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $11.1B | $10.59B | +4.86% |
Cost of Revenue | $4.82B | $4.32B | +11.61% |
Gross Profit | $6.28B | $6.27B | +0.21% |
Operating Income | $2.21B | $2.51B | -11.78% |
Net Income | $1.58B | $1.81B | -12.97% |
EPS (Basic) | $13.27 | $14.67 | -9.54% |
EPS (Diluted) | $13.26 | $14.64 | -9.43% |
SG&A Expense | $4.07B | $3.76B | +8.08% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $8.46B | $7.6B | +11.22% |
Current Assets | $4.26B | $3.98B | +7.09% |
Total Liabilities | $3.49B | $3.28B | +6.58% |
Current Liabilities | $1.89B | $1.84B | +2.60% |
Stockholders' Equity | $4.96B | $4.32B | +14.75% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.6B | $2.27B | -29.49% |
Investing Cash Flow | $-662.12M | $-798.17M | +17.05% |
Financing Cash Flow | $-1.21B | $-1.65B | +26.86% |
Share Buybacks | $1.18B | $1.64B | -28.01% |
D&A | $496.23M | $446.52M | +11.13% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 56.6% | 59.2% | -2.62% |
Operating Margin | 19.9% | 23.7% | -3.75% |
Net Margin | 14.2% | — | — |
ROE | 31.8% | — | — |
ROA | 18.7% | — | — |
Current Ratio | $2.258 | — | — |
Debt to Equity | $0.704 | — | — |
Other companies in Apparel, Accessories & Luxury Goods
lululemon reported FY2025 revenue of $11.1B (+4.9% YoY) but saw profitability decline, with net income falling 13.0% to $1.58B and diluted EPS dropping to $13.26 from $14.64. The key issue was cost of revenue growing 11.6% — more than twice the pace of revenue — which compressed gross margin by 260bps to 56.6%.
lululemon's profit declined in FY2025 primarily because costs grew faster than revenue: cost of revenue rose 11.6% and SG&A expenses increased 8.1%, while revenue only grew 4.9%. This dual pressure compressed operating margin to 19.9% (from ~23.7%) and drove net income down 13% to $1.58B.
lululemon's gross margin contracted 260bps to 56.6% in FY2025, down from 59.2% in the prior year, as cost of revenue surged to $4.82B. This is a significant deterioration for a premium brand and suggests rising supply chain, product, or fulfillment costs are pressuring the business.
lululemon's balance sheet remains solid, with a current ratio of 2.26, debt-to-equity of 0.70, and stockholders' equity growing 14.7% to $4.96B. However, the 29.5% decline in operating cash flow to $1.60B and margin compression are areas investors should monitor closely.
lululemon repurchased $1.18B worth of shares in FY2025, down 28.0% from $1.64B in the prior year, as declining operating cash flows reduced the company's capacity for capital returns. Despite the reduction, buybacks helped partially offset the EPS impact of lower net income.