--- title: "LULU: Dropping slow craft — will a ZARA-style fast push save its 'little black pants'?" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39324545.md" description: "North America, the 'home market', remains soft" datetime: "2026-03-18T02:29:38.000Z" locales: - [en](https://longbridge.com/en/topics/39324545.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39324545.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39324545.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/topics/39324545.md) | [繁體中文](https://longbridge.com/zh-HK/topics/39324545.md) # LULU: Dropping slow craft — will a ZARA-style fast push save its 'little black pants'? Lululemon reported Q4 FY2025 (ended Dec 2025) after the U.S. market closed on Mar 18 Beijing time. Overall, with guidance repeatedly cut earlier, the bar for Q4 was already low, and the print came in weak but broadly in line. $Lululemon(LULU.US) Key takeaways: 1. **Revenue slightly beat.** Q4 revenue rose 0.8% YoY, continuing to decelerate to a three-year low. Excluding previous year's extra 53rd week, revenue grew 6% YoY, still far below the 15%+ pace of recent years, with core weakness stemming from stagnation in North America. **2\. China drove core growth.** By region, excluding the 53rd week, North America fell 1% YoY, extending Q3 softness. While Lululemon is accelerating product drops and has appointed a global product creative lead, there is still no new product taking over the growth flag from its classics. China grew 32% YoY, maintaining strong momentum, and other Intl markets (ex-China) showed modest same-store acceleration on brand halo effects, likely becoming a 'growth relay' alongside China. **3\. Womenswear growth improved QoQ.** By category, excluding the 53rd week, core womenswear rose 7% YoY, with a slight sequential pickup vs. Q2–Q3. Dolphin Research estimates the improvement was driven by tighter coordination between design and merchandising, which sped up the launch cadence and lifted newness contribution. Menswear grew 3% YoY, a middling performance. **4\. Intl expansion stepping up.** As of Q4, global store count reached 811, a net add of 15 QoQ, with China the main engine. Strategy favors larger-format stores, and the company announced its largest Intl expansion plan to date: in 2026 it will enter Greece, Austria, Poland, Hungary, Romania and India. This further extends its global footprint. **5\. GPM contraction weighed on profitability.** Tariff headwinds and heavier Q4 discounting to clear inventory drove a 460bps YoY decline in GPM. With Intl expansion and increased investment in digital and supply chain, the opex ratio rose ~100bps. Dolphin Research estimates core OPM at 22.5%, down 560bps. **6\. 2026 growth guided at 2%–4%.** After a slowdown in 2025, guidance for 2026 remains conservative, suggesting another tough transition year for Lululemon. Management appears cautious as product and org changes ramp through H1. Execution will be key. **7\. Financial highlights** **Dolphin Research view:** Given prior guidance cuts and high-frequency store trackers in North America, Q4 weakness looked priced in. Stepping beyond the quarter, here is a brief take on 2026: the core question is whether the new leadership team can reignite U.S. consumer demand through product reform. On the call, the new creative director's designs will launch in Feb–Mar, with stronger curation and a more refined, elevated color palette. On operations, the product development cycle will be shortened from 18–24 months to 12–14 months, with better replenishment and chase capabilities. For blockbusters, replenishment is targeted within 6–8 weeks. This should improve speed-to-market and responsiveness. These changes point to a 'small-batch, quick-turn' approach, shifting away from relying on evergreen staples and toward continuous new design and cuts to drive repeat purchases. Given faster-changing tastes among younger consumers and competitors Alo Yoga and Vuori leaning into fast-fashion playbooks, a two-year R&D cycle risks missing the trend by the time product lands. Lululemon's pivot is sensible in this context. On valuation, tariff headwinds likely persist into 2026, and a quick-turn model demands high supply chain flexibility, which may lift opex near term. With revenue guided at 2%–4% and assuming flat profit, 2026 implies ~12x P/E. Risk-reward looks more balanced near current levels. That said, the brand still has strong fundamentals in product, channels and marketing: fit and patterns are battle-tested, hero items remain supply-constrained, and repeat purchase rates are healthy. Inventory appears more normalized, which reduces the risk of further de-rating. Downside from here looks limited. **From a trading perspective, until we see a clear uptick from the new product cycle, this screens more as a left-side entry than a confirmed inflection.** For conservative investors, we recommend staying on the sidelines for now. Wait for evidence of a sustained recovery. **I. Investment framework** Per company disclosures, Lululemon's revenue comes from womenswear, menswear and other. We outline each to set up deeper analysis. This framing clarifies growth drivers and margin mix. **Womenswear: the profit pillar.** Since inception, womenswear has been the core revenue driver, now exceeding 60% of sales. The lineup centers on yoga pants, complemented by hoodies, outerwear and tees, with fabric-led variants covering indoor sport and casual basics. It anchors the brand's positioning. **Menswear: later start, second growth curve.** Lululemon entered menswear in 2013, borrowing the womenswear formula—fabric-first, comfort plus style. With a smaller base, growth has outpaced womenswear, and in 2022 management set a five-year goal to double menswear by 2026. Execution remains the swing factor. **Other: high-margin supplements.** 'Other' includes footwear, sport accessories and Lululemon Studio (fitness experience platform). Though smaller in scale than apparel, margins and growth are higher, with footwear launched in 2022 prioritized by management but still nascent in size. Optionality is meaningful. **II. Revenue slightly above consensus** Q4 revenue was $3.64bn, +0.8% YoY, with growth continuing to slow to a three-year low. Excluding previous year's extra week, revenue rose 6% YoY, still well below the 15%+ rates of prior years. The core issue remains a stall in North America. **II. Womenswear growth improved** By category, excluding the 53rd week, core womenswear grew 7% YoY, with a slight sequential pickup vs. Q2–Q3. To address the 'freshness' gap, Lululemon accelerated the womenswear iteration cadence starting in Q4. It shifted from muted tones to brighter, higher-saturation colors. Beyond core tights, the brand stepped up wide-leg, cargo and high-rise trousers to enable all-day dressing. Menswear rose 3% YoY, and the push intensified into performance contexts such as golf and training. The aim is to move beyond the 'yoga brand' label toward defined performance lanes. **For both womenswear and menswear, org changes were completed this year and strategy refocused on product innovation.** New products need time to build word-of-mouth and repeat behavior, so the key observation window is H1 2026. Starting Feb–Mar, the new creative director's designs will roll out in volume. Other (accessories, bags, footwear and lifestyle) grew 4% YoY. Accessories saw more functional expansion beyond the classic belt bag, including the multi-purpose Parent Backpack for camping. It was a holiday-season growth driver. **III. China remained the core growth driver** By region, North America remained soft at $2.65bn, down 1% YoY. Despite a strong Thanksgiving period and record single-day online sales on Black Friday, growth slowed sharply after the holiday, and heavier discounting suggests demand remains weak. Promotions helped clear inventory but pressured margins. Dolphin Research has noted that U.S. share loss stems from classic styles with overly long lifecycles and fading novelty. After a series of changes—new global creative director, tighter curation and a more elevated color system—the North American launch cadence is improving. Results have yet to show a clear turn, but the remedies look on the right track. China revenue was $590mn, +31% YoY, sustaining high growth. By category, Lululemon promoted the EasyFive series in Q4, targeting light office/daily commute scenarios. It also leaned into tennis as the sport gains social traction among high-net-worth consumers. **IV. Accelerating overseas store openings** As of Q4, global store count reached 811, a net add of 15 QoQ, with China leading new openings. Beyond densifying Beijing and Shanghai, Lululemon entered more provincial capitals and core lower-tier cities such as Kunming, Xuzhou and Hohhot. It also expanded and relocated older stores to larger, more central mall spaces to showcase full footwear, menswear and golf lines. Intl expansion-wise, Lululemon announced at year-end its largest plan ever. In 2026, it will enter Greece, Austria, Poland, Hungary, Romania and India. This should diversify growth beyond China. Same-store trends were notably better in Intl markets ex-China, benefiting from brand halo effects. This cohort may become a 'growth relay' alongside China. It broadens the recovery path. By channel, online grew 13% YoY, accelerating sequentially and outpacing stores. This helped offset weaker offline footfall, particularly in North America. Price-sensitive consumers often try in-store and then seek online discounts/coupons, and heavier TikTok and Instagram ad spend in 2025 improved social conversion. **V. GPM declined visibly** Tariffs and the removal of the minimum duty-free threshold (effective Aug) lifted supply chain costs. In Q4, Lululemon also increased discounting via the 'We Made Too Much' channel in North America, which avoided inventory build but sacrificed part of margin. GPM fell 460bps YoY. **VI. Opex ratio edged up** With Intl expansion and investments in digital and supply chain, the opex ratio rose ~100bps. Dolphin Research estimates core OPM at 22.5%, down 560bps YoY. Profitability pressure was broad-based. Dolphin Research articles on Lululemon: Deep dives: Mar 12, 2025: '[LULULEMON: How did a pair of black pants carve a bloody path?](https://longportapp.cn/en/topics/28033092?channel=t28033092&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN)' Apr 10, 2025: '[Lululemon: Men are unreliable, and overseas can't carry the weight?](https://longportapp.cn/en/topics/28840305?channel=t28840305&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN)' Earnings: Apr 1, 2025: '[Lululemon: The 'little black pants' lost their magic — is the Hermes of yoga getting double-hit?](https://longportapp.cn/en/topics/28526850?channel=t28526850&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN)' Jun 6, 2025: '[Lululemon plunges again? Profits collapsed too fast, valuation fell too slow!](https://longportapp.cn/en/topics/30414958?channel=t30414958&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN)' Dec 12, 2025: '[Lululemon: Green shoots or a flash in the pan?](https://longbridge.cn/en/topics/37082556?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=8f2e2436-4f16-4ba1-a30f-83ec2310e550)' Risk disclosure and disclaimer:[Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [lululemon athletica inc. (LULU.US)](https://longbridge.com/en/quote/LULU.US.md) ## Comments (1) - **彼得.林奇的交易员Jeff · 2026-03-18T02:32:21.000Z**: It's been cut in half several times, feels like a dream back to 2019