Lululemon reported Q4 2025 revenue of 3.6 billion dollars, up just 1% year on year, with North America comparable sales down 2% for the third consecutive year of U.S. weakness, while China mainland revenue surged 28% and comparable sales rose 26%, confirming a two-speed business where international momentum cannot yet offset the core market's steady erosion. Gross margin collapsed 550 basis points in Q4, hit by both markdowns used to clear inventory and a 380 million dollar tariff headwind for 2026 that management says it will offset "almost all" of through full-price selling and vendor renegotiations, while 2026 guidance of 11.35–11.5 billion dollars in revenue and 12.10–12.30 dollars EPS came in below consensus, sending shares to around 160 dollars and a forward P/E of roughly 13–14x, a multiple last seen before the brand became a premium growth story.

The investment case hinges on three unresolved questions. First, the U.S. business: management guided North America revenue down 1–3%…