How LULU (Lululemon Athletica) Makes Money in 2025: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a premium athletic apparel retailer like LULU Income Statement Overview makes money is essential for investors and anyone interested in the business of activewear and lifestyle brands. In this post, we break down LULU's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick LULU Overview

LULU Income Statement Overview operates as a leading designer, distributor, and retailer of premium athletic apparel and accessories, primarily under the lululemon brand. Revenue comes from the sale of women’s and men’s activewear, as well as other product categories including accessories and footwear. The company’s business model is driven by direct-to-consumer sales through its global retail stores and e-commerce platform, with a growing presence in international markets and product innovation across segments.

Revenue Breakdown

• Total Revenue (Q3 2025): $2.53B (+6.5% YoY)
  • Women's Product Revenue: $1.55B (61.3% of total)
  • Men's Product Revenue: $625M (24.7% of total)
  • Other Product Categories Revenue: $353M (14.0% of total)
  • Growth is powered by continued expansion in women’s and men’s apparel, strong e-commerce performance, and double-digit growth in new product categories.

Gross Profit and Margins

• Gross Profit: $1.48B (58.5% gross margin)
  • Cost of Revenue: $1.05B (+9.3% YoY)
  • LULU maintains robust margins due to its premium pricing, direct-to-consumer focus, and efficient supply chain management.
• Most costs come from product sourcing, manufacturing, and distribution logistics.

Operating Income and Expenses

• Operating Income: $524M (-3.0% YoY, 20.7% margin)
• Operating Expenses: $952M (+9.1% YoY)
  • R&D: Not separately disclosed; innovation is embedded within product development and SG&A.
  • SG&A: $952M (+9.1% YoY, 37.7% of revenue) — includes store operations, marketing, digital platform investments, and corporate overhead.
  • LULU continues to invest in brand innovation and global expansion while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $534M (-4.4% YoY, 21.1% margin)
• Income Tax: $163M (30.5% effective tax rate)
• Net Income: $371M (-5.6% YoY, 14.7% net margin)
• LULU converts a significant portion of sales into profit due to its scalable business model and strong brand pricing power.

Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.

Want to see what we'll uncover next - before everyone else does?

Find Hidden Gems First!

What Drives LULU's Money Machine?

• Women's Product Revenue: 61%+ of revenue, driven by core activewear and lifestyle apparel.
• Direct-to-Consumer Sales: High-margin e-commerce and retail store sales, with digital channels contributing a growing share.
• Brand Investment: Strategic investments in product innovation, international expansion, and digital experience.
• Future growth areas: Expansion into men’s apparel and new product categories (e.g., footwear, accessories), though these segments are not yet as profitable as core women’s apparel.

Visualizing LULU's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant investments in marketing, digital, and store operations, 14.7% of revenue drops to the bottom line.

Key Takeaways

• LULU's money comes overwhelmingly from women’s activewear and lifestyle apparel.
• High gross and net margins illustrate the power of LULU's premium, direct-to-consumer business model.
• Heavy investment in brand, digital, and international growth, balanced by efficiency in operating costs.
• Ongoing growth is driven by product innovation, digital expansion, and new market entry.

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best) overall value plays for 2025
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About LULU's Income Statement

1. What is the main source of LULU's revenue in 2025?

LULU generates over 61% of its revenue from women’s product sales, with men’s apparel and other categories (including accessories and footwear) making up the remainder.

2. How profitable is LULU in Q3 2025?

LULU reported net income of $371M in Q3 2025, with a net margin of approximately 14.7%, reflecting strong profitability driven by premium pricing and efficient operations.

3. What are the largest expense categories for LULU?

The biggest expenses on LULU's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A investment reached $952M in Q3 2025, as LULU prioritizes store operations, digital platform development, and marketing.

4. Why does the "Other Product Categories" segment operate at a lower margin?

Other Product Categories, despite generating $353M in revenue, contribute less to operating profit due to higher investment in new product launches, marketing, and supply chain scaling. LULU believes these will drive long-term growth—even if the segment is less profitable today.

5. How does LULU's effective tax rate compare to previous years?

LULU's effective tax rate in Q3 2025 was 30.5%, higher than in some previous years. This moderate rate is primarily due to changes in geographic profit mix and reduced tax benefits from share-based compensation.