Understanding Lululemon (LULU) Reliance on International Revenue

Have you assessed how the international operations of Lululemon (LULU) performed in the quarter ended April 2025? For this athletic apparel maker, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

Participation in global economies acts as a defense against economic difficulties at home and a pathway to more rapidly developing economies. However, it also comes with the complexities of dealing with fluctuating currencies, geopolitical risks and different market dynamics.

Our review of LULU's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The company's total revenue for the quarter stood at $2.37 billion, increasing 7.3% year over year. Now, let's delve into LULU's international revenue breakdown to gain insights into the significance of its operations beyond home turf.

Exploring LULU's International Revenue Patterns

Canada accounted for 12.35% of the company's total revenue during the quarter, translating to $292.82 million. Revenues from this region represented a surprise of -3.35%, with Wall Street analysts collectively expecting $302.97 million. When compared to the preceding quarter and the same quarter in the previous year, Canada contributed $474.87 million (13.15%) and $281.86 million (12.76%) to the total revenue, respectively.

During the quarter, China Mainland contributed $368.1 million in revenue, making up 15.53% of the total revenue. When compared to the consensus estimate of $369.65 million, this meant a surprise of -0.42%. Looking back, China Mainland contributed $425.02 million, or 11.77%, in the previous quarter, and $303.79 million, or 13.75%, in the same quarter of the previous year.

Of the total revenue, $44.1 million came from Hong Kong SAR, Taiwan, and Macau SAR during the last fiscal quarter, accounting for 1.86%. This represented a surprise of +8.5% as analysts had expected the region to contribute $40.65 million to the total revenue. In comparison, the region contributed $54.74 million, or 1.52%, and $42.26 million, or 1.91%, to total revenue in the previous and year-ago quarters, respectively.

Other geographic areas generated $283.9 million in revenues for the company in the last quarter, constituting 11.98% of the total. This represented a surprise of +4.76% compared to the $270.99 million projected by Wall Street analysts. Comparatively, in the previous quarter, Other geographic areas accounted for $337.65 million (9.35%), and in the year-ago quarter, it contributed $240.58 million (10.89%) to the total revenue.

Revenue Projections for Overseas Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that Lululemon will report a total revenue of $2.54 billion, which reflects an increase of 7.1% from the same quarter in the previous year. The revenue contributions are expected to be 13.4% from Canada ($340.51 million), 15.5% from China Mainland ($393.43 million), 1.7% from Hong Kong SAR, Taiwan, and Macau SAR ($43.3 million) and 12.2% from Other geographic areas ($309.76 million).

For the full year, a total revenue of $11.29 billion is expected for the company, reflecting an increase of 6.7% from the year before. The revenues from Canada, China Mainland, Hong Kong SAR, Taiwan, and Macau SAR and Other geographic areas are expected to make up 13.2%, 14.8%, 1.7% and 11.2% of this total, corresponding to $1.49 billion, $1.67 billion, $188.19 million and $1.27 billion respectively.

Closing Remarks

Relying on global markets for revenues presents both prospects and challenges for Lululemon. Therefore, scrutinizing its international revenue trends is key to effectively forecasting the company's future outlook.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

At the moment, Lululemon has a Zacks Rank #3 (Hold), signifying that its performance may align with the overall market trend in the upcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Lululemon's Recent Stock Market Performance

The stock has witnessed a decline of 5.2% over the past month versus the Zacks S&P 500 composite's an increase of 7.2%. In the same interval, the Zacks Consumer Discretionary sector, to which Lululemon belongs, has registered an increase of 8.1%. Over the past three months, the company's shares saw a decrease of 14.7%, while the S&P 500 increased by 4.9%. In comparison, the sector experienced an increase of 6.5% during this timeframe.

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This article originally published on Zacks Investment Research (zacks.com).

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