Apparel and athleisure brand Lululemon shook off sluggish sales at its stores in the United States by expanding — both overseas and online — in its fiscal fourth quarter.
Digital sales, which grew by 9% year over year, paved the way for a profitable Q4 quarter for Lululemon. Digital sales totaled $1.9 billion, comprising over half of Lululemon’s total quarterly revenue.
Lululemon is No. 24 in the Top 2000. The database ranks North America’s largest online retailers by their annual ecommerce sales and more.
Lululemon revenue in Q4
Other highlights from Lululemon’s fourth-quarter earnings included:
- Total net revenue increased to $3.6 billion, up 1% — or 6% year over year when excluding the extra 53rd week from the prior year — with comparable sales up 2% on a constant currency basis.
- Earnings in China powered overall results, with revenue up 28 percent despite some calendar headwinds.
- North America revenue was mixed: U.S. revenue declined 1%, while Canada increased 3%.
The company expects headwinds from tariffs and supply chain uncertainty in the year ahead, which caused it to lower earnings expectations for 2026.
Meghan Frank, the chief financial officer at Lululemon, highlighted “enhancements” coming to the online guest experience in 2026, a sentiment echoed by interim co-CEO Andre Maestrini.
“We are evolving the experience to better reflect the premium positioning of the Lululemon brand,” Maestrini said.
Lululemon’s current challenges
Analysts following Lululemon pointed to a mixed bag of possibilities for the company.
Hubert Paul, a partner in the Consumer Sector North America practice at global strategy consulting firm Simon-Kucher, said Lululemon cannot let strong growth overseas mask flat sales in the United States.
“International growth is buying them time, but it is not solving the core issue in the Americas,” he said. “Management had already publicly flagged disappointment with U.S. results and product execution in Q2, and Q4 still showed Americas revenue down 4% and Americas comparable sales down 1%.”
Paul added that the brand still has global pull, though its core market needs sharper product, merchandising and conversion.
He said that Lululemon is not in a brand crisis. However, he believes it does need a core reset in the U.S.
“Our view is that their brand is still healthy, but just not fully in balance,” Paul explained. “It is still one of the strongest premium brands in the category, with FY2025 revenue up 5% to $11.1 billion and international revenue up 22%.”
Still, the company faces lingering issues in the Americas.
“But Americas declined 1% for the year, Americas comparable sales fell 3%, and the company is guiding to just 2% to 4% growth for 2026,” Paul stated. “From a product view, the quarter shows the brand still has heat, but again not evenly across the portfolio.”
Paul pointed to examples by category.
“Q4 women’s revenue was up 7%, men’s was up 3%, and digital was up 9%,” he noted. “So this is not a brand with no demand. It is a brand that needs broader-based momentum, especially in its core market.”
What’s working for Lululemon?
Paul said that flat physical store sales versus more robust digital performance shows that digital is working — but that there’s more to be done.
“The priority should be driving towards full-price sell-through, higher basket size and repeat purchase, not incremental volume through promotion,” Paul said.
He added that management has already identified improving full-price sales, especially in North America, as a key priority.
Moreover, Paul said the company needs to apply artificial intelligence (AI) to the highest-value commercial problems that have started to become standard in the industry: fit, styling, search and replenishment. He pointed to Lululemon’s creation of a chief AI and technology officer role in 2025 to improve personalization, guest engagement, agility and speed to market as a strong step.
“In apparel and footwear, better fit confidence and better recommendations are direct conversion levers,” Paul said.
In his eyes, the company should use digital to sell Lululemon’s full solution, not just individual items.
“That means outfitting across women’s, men’s, accessories and footwear, tied to community, content, and store visibility,” Paul assessed. “This is the best way for digital to drive AOV and lifetime value without eroding the brand.”
Lululemon’s place in the athleisure category
Elizabeth LaFontaine, director of research at Placer.ai, said that Lululemon is facing stiffening competition in the athleisure category and needs to do more.
“It hasn’t been able to maintain its pace of innovation,” she stated. “There is still a lot of brand affinity, with it being seen as a staple in many wardrobes, but the retailer needs to give consumers reasons to keep coming back consistently.”
She believes that community is a foundation for the brand, but that in recent years the focus on community building hasn’t been at the forefront of its strategy.
LaFontaine said that to continue its online growth, Lululemon has to transfer some of the mojo it has at its physical locations into the digital domain.
“The stores have helped the brand build its legacy through community events and product knowledge, which aren’t as easy to replicate online,” LaFontaine said.
She added that while the digital channel has often allowed the brand to carry its full assortment, continuing that growth means “the ecommerce channel must be able to give that personal touch and education that shoppers are looking for.”
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