Lululemon Athletica (LULU, Financial) just dropped its Q3 numbers, and they're a mix of wins and hurdles, driving its share to soar 9% in the pre-market trading today. For its results, revenue climbed 9% to $2.4 billion, driven by a stunning 39% surge in China and a 33% overall increase in international markets. But while the global side of the business is crushing it, things are looking a bit shaky at home. The Americas, which make up 74% of Lululemon's sales, eked out just 2% growth—flatlining in the U.S. market. The company's gross margin ticked up to 58.5%, and earnings per share landed at $2.87, blowing past Wall Street's $2.71 estimate.
CEO Calvin McDonald is sticking to the ambitious Power of Three ×2 strategy, targeting $12.5 billion in revenue by 2026. To fuel that goal, Lululemon is expanding aggressively overseas, adding 28 new stores this quarter, including its first locations in Italy and more in Mexico. The board also greenlit a $1 billion bump to its stock buyback plan, signaling big confidence despite rising SG&A expenses and inventory levels up 8%. CFO Meghan Frank says they're “set up” for a strong holiday season, but all eyes are on whether the U.S. market can find its footing.
For Q4, Lululemon is forecasting revenue between $3.475 billion and $3.510 billion—a healthy 8-10% jump. The international markets are expected to keep carrying the load, while product innovation and marketing investments aim to reengage U.S. customers. With $1.2 billion in cash and a newly expanded buyback war chest, Lululemon has the financial muscle to keep its growth story alive. But can it overcome domestic headwinds to hit those lofty 2026 targets? Investors will be watching this holiday quarter like hawks.
