Published on: 2025-12-12
Lululemon stock has climbed more than 10% in after-hours trading, moving from a regular session close at $187.01 to $206.97 after the company reported solid third quarter results and announced a forthcoming change in leadership.
Lululemon Athletica Inc delivered third quarter 2025 revenue of approximately $2.57 billion, up about 7 per cent year on year, and adjusted earnings per share of $2.59, both comfortably ahead of analysts' consensus estimates.
The board also approved a $1.0 billion increase to its stock repurchase programme and said that Chief Executive Officer Calvin McDonald will step down at the end of January 2026, a move that did not appear to dent investor enthusiasm.
In after-hours trading the stock climbed from a regular-session close near $187.01 to about $206.97, a rise of 10.67 per cent, raising the central question for the market: why did Lululemon stock jump so sharply despite the chief executive's resignation announcement?
Before the earnings and leadership announcement:
Lululemon stock traded in a relatively wide range of $182–$188 during the regular session.
The stock closed the regular session at approximately $187.01.
The 52‑week range has spanned $159.25 to $423.32, reflecting strong volatility over the past year.
Market capitalisation at recent prices was about $22.4 billion.
After the third quarter results and CEO announcement:
Revenue and earnings exceeded analysts'expectations, with adjusted EPS of $2.59 and revenue of $2.57 billion.
The board expanded the stock repurchase programme by $1.0 billion, signalling confidence in the business.
In after-hours trading, shares jumped to around $206–$207, an increase of roughly 10.67 per cent.
Investors appeared to reward the combination of strong financial performance and clear capital allocation, despite the CEO transition.
Market context and interpretation:
This surge was not a market punishment; it reflected solid numbers meeting investor expectations.
LULU stock had been recovering from a year-to-date decline of nearly 50 per cent, with a 10 per cent rally in the month before the announcement.
The sharp after-hours rise shows traders prioritised tangible financial metrics and the buyback expansion over near-term executive uncertainty.
Compared with past earnings reactions, the current market response highlights renewed investor confidence in operational performance and international growth potential.
The company's third quarter financial performance showed both strengths and challenges. Below is a snapshot of key metrics.
| Metric | Third Quarter 2025 | Notes |
|---|---|---|
| Revenue | $2.57 billion | Year-over-year increase and above consensus estimates. |
| Adjusted earnings per share | $2.59 | Stronger than analysts expected. |
| Net income | $307 million | Decline compared with the prior year, reflecting margin pressures. |
| Stock buyback authorisation | +$1.0 billion | Immediate expansion of repurchase programme. |
| Full year revenue guidance | ~$10.96–$11.05 billion | Reaffirmed outlook for full fiscal year. |
International sales grew at a robust pace while U.S. sales remained soft, illustrating geographic imbalances in recent performance. Higher costs from tariffs and promotional activity contributed to net income pressures.
Lululemon announced that CEO Calvin McDonald will step down at the end of January 2026. remaining as a senior adviser for the first few months of 2026 to assist with the transition.
Board chair Marti Morfitt will take an expanded executive role, while interim co-CEOs, Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini, will oversee daily operations until a permanent successor is appointed.
Despite the leadership change, the stock responded positively. The company's strong Q3 results, with revenue of $2.57 billion and adjusted EPS of $2.59. alongside the announcement of a $1.0 billion stock repurchase, reassured investors.
Lululemon stock surged 10.67 per cent in after-hours trading, reflecting confidence in the company's operational strength and capital return strategy, showing that financial performance and strategic clarity outweighed short-term executive uncertainty.
| Date | Event |
|---|---|
| 11 December 2025 | Lululemon reports Q3 results, expands buyback by $1.0 billion and announces CEO succession plan. |
| 31 January 2026 | Calvin McDonald's effective resignation date. |
| Early 2026 | Ongoing CEO search and strategic execution under the interim leadership team. |
Following the after-hours rally, Lululemon stock has entered a technically significant zone that traders and investors are watching closely.
The surge to approximately $206–$207 represents a 10.67 per cent gain from the regular session close of $187.01. pushing LULU toward short-term resistance levels near its recent highs in the $210–$215 range.
From a technical perspective:
Support levels now lie around $190–$192. which coincides with pre-earnings consolidation and previous intraday lows.
The stock is showing strong momentum indicators, with the Relative Strength Index (RSI) moving above 70 in after-hours trading, suggesting overbought conditions in the short term.
Moving averages provide context for medium-term trends: the 50-day moving average sits near $182. while the 200-day moving average is around $198. The after-hours spike positions the stock above both, signalling positive short-to-medium-term momentum.
Volume trends also support the price action. The surge occurred on unusually high after-hours volume, which confirms strong investor interest rather than a brief, speculative spike.
Traders may watch for follow-through in the next regular session to determine whether this momentum can be sustained or if profit-taking emerges.
In summary, LULU's technical picture after the after-hours jump indicates strong bullish momentum, but the stock has entered a zone where short-term overbought conditions and resistance levels could lead to consolidation.
Investors and traders should monitor price action around $210–$215 and watch for support near $190–$192 for guidance on the next move.
Traders looking at Lululemon in the near term should consider a few tactical points:
Watch support around $190–$192
This zone aligns with pre-earnings consolidation and intraday lows. If LULU stabilises here on strong volume, any pullback may be a normal post-earnings adjustment rather than a trend reversal.
Observe follow-through after the after-hours surge
A move above $210–$215 would indicate strong momentum and continued buying interest, while a drop back below support could signal a short-term consolidation toward $185–$188.
Respect volatility
LULU has shown significant swings in recent weeks. Short-term traders should set logical stops, accounting for the stock’s potential to move quickly in both directions.
For aggressive traders, buying near support levels with a clear invalidation point below $185 may offer an opportunity to capitalise on momentum, provided they are comfortable with potential short-term swings.
For those with a horizon of years rather than weeks:
Bullish case:
Lululemon remains a dominant player in the premium athletic apparel and athleisure market, with strong brand loyalty, expanding international sales, and growing e-commerce revenue.
The company's capital return strategy and solid Q3 earnings reinforce confidence in long-term fundamentals.
Risks:
Valuation is elevated, and challenges remain in the U.S. market, where competition is strong and margins face pressure from tariffs and promotional activity.
Any slowdown in international growth or execution missteps could quickly affect the stock's multiple.
In this context, the after-hours surge following the CEO announcement and Q3 beat does not imply the story is broken. Instead, it illustrates that even well-performing companies have price points where short-term profit-taking or consolidation can occur, creating opportunities for both traders and long-term investors.
Shares rose because the company beat third quarter estimates, authorised an extra $1.0 billion in share repurchases and put a credible interim leadership plan in place, which together eased investor concerns.
Calvin McDonald is scheduled to step down effective 31 January 2026 and will remain as a senior adviser through an agreed transition period to assist with continuity.
The company provided or reaffirmed a full year revenue range of $10.96 to $11.05 billion and reiterated priorities while acknowledging near term margin pressures from tariffs.
The $1.0 billion authorisation is significant because it returns capital to shareholders and can support earnings per share, signalling that the board views the shares as attractive at current prices.
The principal risks are continued U.S. market weakness, margin pressure from tariffs and promotions, potential governance distraction, and uncertainty about the permanent CEO appointment.
Lululemon stock's strong after-hours performance reflects a combination of earnings outperformance, strategic capital allocation through a larger buyback programme, and a clearly communicated leadership transition plan.
Although the chief executive resignation could have unsettled markets, the positive financial results and board actions provided near-term support for the share price. Investors will now focus on execution in key markets, margin recovery, and the search for a long-term chief executive.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
