Lululemon Earnings: Buyback Increase and CEO Transition
Lululemon earnings report Q3 top-line gains, a $1.0 billion buyback increase and a planned CEO exit that shifts near-term capital and trader positioning.
KEY TAKEAWAYS
- Reported Q3 net revenue of $2.6 billion, up 7.0% year-over-year.
- Board authorized a $1.0 billion increase to the stock repurchase program.
- CEO Calvin McDonald will step down Jan. 31, 2026, with Marti Morfitt to become non-executive chair.
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Lululemon Athletica Inc. (LULU) reported third-quarter revenue growth in its earnings released Dec. 11, 2025, alongside plans for a CEO transition and an expanded stock-repurchase program. Calvin McDonald will step down as CEO and board member effective Jan. 31, 2026, and the board authorized a $1.0 billion increase to its buyback authorization.
Third-Quarter Results and Buyback Expansion
For the quarter ended Nov. 2, 2025, Lululemon reported net revenue of about $2.6 billion, a 7.0% increase from a year earlier. Diluted earnings per share (EPS) fell to $2.59 from $2.87 but exceeded analyst expectations. The company said, "In the third quarter, our teams remained focused on driving improvements within our U.S. business and maintaining momentum in our international regions."
Gross profit rose 1.7% year over year to $1.4 billion, while operating income declined 11.2% to $436 million. Net income dropped 12.8% to $307 million, and operating cash flow also eased to $307 million. Regionally, Americas net revenue declined 2.0%, though management noted continued momentum internationally.
The board approved a $1.0 billion increase to the existing stock-repurchase program, expanding the company’s capital return capacity.
Management updated full-year 2025 guidance, projecting net revenue between $10.96 billion and $11.05 billion and diluted EPS of $12.92 to $13.02. This outlook factors in an estimated $210 million negative impact on operating income from higher U.S. tariffs and the removal of the de minimis exemption.
CEO Succession and Board Changes
Calvin McDonald will resign as CEO and board member effective Jan. 31, 2026, and serve as a senior advisor through Mar. 31, 2026. The board is conducting a comprehensive search for his successor with a leading executive search firm, considering both internal and external candidates.
Martha A.M. “Marti” Morfitt, the lead independent director, will become non-executive chair of the board when McDonald leaves the board. McDonald has served as CEO since 2018.
