Lululemon eyes China growth, menswear after Q1 miss

For more China-focused finance coverage, subscribe to the Jing Finance newsletter for the latest news, business updates, global analysis, and trends shaping financial markets. What happened Lululemon’s shares dropped by nearly 20% on June 6 following a disappointing Q1 earnings report and a downward revision of its full-year forecast. Although revenue climbed 7% to reach $2.4 billion and gross margin improved to 58.3%, the results and guidance for Q2 fell short of expectations. The company now anticipates its full-year operating margin to decline by up to 160 basis points — steeper than previously projected — due in part to higher expenses tied to U.S. import tariffs implemented by President Donald Trump. Analysts also raised concerns about inventory levels, which rose 23% while sales increased by only 7%, suggesting possible upcoming markdowns. CEO Calvin McDonald forecasted modest growth in North America but continued strength in China, where revenue is projected to grow by 25% to 30%. The Jing Take Just before its stock dip, Lululemon had projected full-year net revenue in the range of $11.15 billion to $11.3 billion. CEO Calvin McDonald credited the company’s global performance to offerings in key categories like yoga, running, training, golf, and tennis. However, the firm’s tumbling share price reflects increased price sensitivity amid widespread uncertainty around U.S. tariffs and the subsequent global economic slowdown. In Q4 2024, the Canadian athleisure brand saw its global net revenue climb 13% to $3.6 billion. For the full year, revenue increased by 10% year-on-year, reaching $10.6 billion — marking a major milestone for the brand. In mainland China alone, where Lululemon has opened 151 stores, the company reported a 41% year-over-year increase in annual revenue. Shifting gears: Lululemon responds to new rivals Despite strong momentum last year, Lululemon now faces fiercer competition from emerging activewear brands like Alo Yoga and Adanola, which are thriving by building tight-knit communities and promoting aspirational, fashion-forward branding. With rivals perfecting the effortless wellness aesthetic, the brand can no longer rely solely on its core product lines. To broaden its appeal, Lululemon has doubled down on menswear — most notably naming Ferrari Formula 1 driver Lewis Hamilton as its global ambassador in February 2025, signaling a strategic push to attract male consumers. According to Lululemon CFO Meghan Frank, the company still plans to open 40 to 45 new locations this year, focusing heavily on international growth, especially in China. Lululemon also intends to implement selective price hikes to mitigate the effects of tariffs. Additional research conducted by William Zhou. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Lululemon eyes China growth, menswear after Q1 miss

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Published June 12, 2025

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Lululemon eyes China growth, menswear after Q1 miss