stockrowWhat it does
lululemon is a designer, distributor and retailer of technical athletic apparel, footwear and accessories sold under the lululemon brand. Its assortment includes pants, shorts, tops and jackets for yoga, running, training and other activities; apparel for everyday movement; and fitness-inspired accessories.
The company designs products around technical fabrics, fit and functional features. Its design and development teams include researchers, scientists, engineers and designers, and they use guest and ambassador feedback alongside market research. lululemon develops proprietary fabrics and works with fabric and trims suppliers on product specifications.
It sells directly to people it calls guests through stores, websites and mobile apps, while also using selected wholesale, licensed and supply arrangements. Stores are both selling locations and places where the company connects with guests, presents products and supports digital fulfillment. Its omni-channel capabilities include buy online, pick up in store; shipping online orders from stores; and returns online or in stores.
The product range is organized around women’s apparel, men’s apparel, and accessories and other categories. Women’s apparel remains the core range, while the company is also expanding men’s products and accessories. The company operates in 30 countries and employs 39,000 people worldwide.
How it makes money
lululemon earns revenue mainly by selling branded apparel, footwear and accessories through company-operated stores and e-commerce. It also sells through outlets, temporary locations, selected wholesale partners, its Like New re-commerce program, and third parties operating licensed locations or selling under supply arrangements. Outlets sell slower-moving and prior-season inventory at discounted prices.
The company reports three geographic segments: Americas, China Mainland, and Rest of World, which combines Asia Pacific and Europe and the Middle East. Its largest product category is women’s apparel, at $7.0 billion in FY2026, followed by men’s apparel at $2.7 billion and accessories and other categories at $1.4 billion. The company’s sales model combines full-price selling with seasonal clearance and outlet sales for selected inventory.
For the latest fiscal year, net revenue was $11.1 billion. For Q2 2026, total net revenue was $2.4 billion. Management said on the call that digital revenue was $0.9 billion, or 39% of Q2 revenue.
Store economics depend on product demand, traffic, conversion, average order value and selling space. Company-operated store sales per square foot were $1,426 in 2025. E-commerce also extends the brand into markets without stores and includes online orders supported by store inventory. The company is updating core franchises and introducing new styles. Management said on the call that guests are shifting toward away-from-body silhouettes.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Women’s apparel | $6.7 billion | — | — |
| Men’s apparel | $2.6 billion | — | — |
| Accessories and other categories | $1.3 billion | — | — |
Customers and how it sells
lululemon serves guests seeking apparel, footwear and accessories for yoga, running, training, golf, tennis, everyday movement and related activities. It uses stores, websites, mobile apps, third-party online marketplaces, wholesale partners and licensed locations to reach those guests. Wholesale partners include fitness studios, athletic organizations, corporate sales and university campus retailers.
The Americas generated $7.8 billion, or 70.7%, of FY2026 revenue. The United States generated $6.3 billion, or 57.0%, and Canada generated $1.4 billion, or 12.8%. China Mainland generated $1.8 billion, or 15.8%, while Rest of World generated $1.5 billion, or 13.5%.
The company had 811 company-operated stores at February 1, 2026, including 476 in the Americas, 172 in China Mainland and 163 in Rest of World. It also had 45 locations operated by third parties under license and supply arrangements. Physical stores are primarily located on streets, in lifestyle centers and in malls. Digital channels let the company serve guests beyond its physical footprint, including through country-specific sites and regional online marketplaces.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| United States | $6.5 billion | — | — |
| China Mainland | $1.4 billion | — | — |
| Canada | $1.4 billion | — | — |
| Other geographic areas | $1.1 billion | — | — |
| Hong Kong SAR, Taiwan, and Macau SAR | $180.1 million | — | — |
| Mexico | $33.3 million | — | — |
Suppliers and costs
lululemon does not own or operate manufacturing facilities. It obtains fabrics and finished products through a limited supplier base. It worked with approximately 51 product manufacturers in 2025; its five largest produced 47% of products, and the largest produced 15%. Vietnam made 40% of products, followed by Cambodia, Sri Lanka, Indonesia and Bangladesh.
The company worked with approximately 65 fabric suppliers. Its five largest fabric suppliers produced 48% of fabrics, with the largest providing 20%. Taiwan and China Mainland were the largest fabric-origin countries. Most suppliers and manufacturing sources do not have long-term contracts with the company.
Costs include product costs, tariffs, freight and duty, markdowns, store occupancy, distribution, employee pay, technology, marketing and other operating expenses. In 2025, tariffs and the removal of the de minimis exemption reduced gross profit by approximately $275 million before mitigation. Management said on the call that Q2 2026 SG&A was 41.7% of revenue, compared with 37.7% a year earlier.
- Revenue$11.1B
- Cost of revenue−$4.8B
- Selling, general and administrative−$4.1B
- Operating income$2.2B
Competitive position
The athletic apparel market is highly competitive. Competition is based principally on brand recognition, product quality, innovation, style, distribution and price. lululemon competes with global, regional and country-specific wholesalers and direct sellers of athletic apparel and footwear, as well as established companies expanding performance-product offerings and new entrants.
The company seeks to compete through technical product innovation, fabric development, function and style, a direct retail model, and marketing through stores, digital channels, ambassadors, community events and content. Its retail and digital channels also give it feedback from guests that it can incorporate into product design. Its trademarks, including the lululemon and wave design trademarks, are important brand assets. No individual competitor is named in the available information.
Our reading: Brand recognition and community-based guest connections are meaningful but depend on continued relevance and traffic; the company itself identified negative commentary and softer product responses as pressures in its largest markets [item1; call_prepared].
Our reading: The direct store-and-digital model provides control over presentation, inventory allocation and guest data, but it does not prevent competition on product, price or distribution [item1].
Our reading: Technical fabrics and product development are a limited moat because fabrics and manufacturing technology generally are not patented and can be imitated [item1; item1a].
Growth opportunities
lululemon’s growth plans include broadening merchandise across women’s, men’s and accessories, introducing new styles, updating established franchises and expanding technical fabrics and functional features. The company is working to shorten product-development timelines and use chase capabilities to replenish selected strong-performing styles more quickly.
Geographic expansion is another growth vector. The company plans to add stores and square footage where it identifies opportunities, with particular emphasis on China Mainland and international markets. In FY2026, China Mainland revenue was $1.8 billion, up 28.9%, while Rest of World revenue was $1.5 billion, up 15.6%. Management said on the call that it now expects approximately 35 net new company-operated stores in fiscal 2026, including approximately 25 in international markets.
The company is also investing in store design, localized assortments, digital storytelling, marketing, ambassadors, community events and omni-channel capabilities. Management said on the call that it is increasing marketing investment in the second half of fiscal 2026, particularly creator and social content. Management also said on the call that it is chasing approximately 20% more product volume in 2026 than in the prior year.
Management said on the call that new away-from-body women’s styles, including Groove Wide Leg, Align Fold-Over Jogger, Breesley and an updated Dance Studio pant, were trending well. It expects momentum in those styles to build through the second half of the year and into 2027.
- $6.3BFY2022
- $8.1BFY2023
- $9.6BFY2024
- $10.6BFY2025
- $11.1BFY2026
Structural risks
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Brand and product relevance: The company’s success depends on maintaining brand value and reputation. Management said on the call that negative media and social-channel commentary hurt traffic, while responses to new product launches were inconsistent.
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North American demand: In 2025, Americas revenue declined 1% and comparable sales declined 3%, with lower conversion, store traffic and average order value. Management said on the call that North America revenue declined 8% in Q2 2026.
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Supply-chain concentration: International supply-chain disruption could materially affect results. Five vendors made 47% of products and five fabric suppliers made 48% of fabrics in 2025; the company lacks long-term contracts with most suppliers and manufacturers.
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Tariffs and cross-border fulfillment: Higher U.S. tariffs and removal of the de minimis exemption increased product and fulfillment costs. The company does not expect mitigation actions to fully offset these costs.
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Inventory and markdowns: Lower demand, changing preferences, quality issues or increased competition can require inventory reserves and clearance. Management said on the call that it had more seasonal product to clear by year-end, primarily through end-of-season clearance.
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Technology and intellectual property: Security breaches could damage customer relationships and create legal and financial exposure. Fabrics and manufacturing technology generally are not patented and can be imitated by competitors.
Bottom line
Our reading
Our reading: lululemon is a vertically distributed athletic-apparel business whose revenue is led by women’s products and the Americas, with stores and digital channels central to both selling and brand engagement [item1; item7]. Its international businesses, particularly China Mainland, have been important growth sources, while recent North American demand, traffic and product-mix pressures have reduced revenue and margin performance [item7; call_prepared]. Its operating exposure includes concentrated international sourcing, tariffs, markdown risk and the need to sustain product and brand relevance in a competitive market [item1; item1a; call_qa].