Revenue Growth and Guidance: Lululemon reported a 7% increase in total revenue for Q1 2025, reaching $2.4 billion. The company maintained its full-year revenue guidance of $11.15 billion to $11.3 billion, implying an annual growth rate of 5% to 7%. This includes an expected growth range of 7% to 8% for the second quarter.

Gross Margin and Cost Pressures: The gross margin for Q1 improved to 58.3%, up from 57.7% in the previous year. However, the guidance for the full year now expects a 110 basis point decrease in gross margin, primarily due to increased tariffs and higher markdowns. These pressures raise concerns about profitability going forward.

Tariff Impact and Mitigation Strategies: Management highlighted ongoing challenges from increased tariffs, especially a 30% increment on China and a 10% rise on other sourcing countries. To mitigate these costs, the company plans to implement modest price increases on select items and pursue efficiencies in its supply chain. This context indicates Lululemon is proactively managing pricing while seeking to maintain profitability.