Lululemon lower its revenue forecast for the yr, harm by greater prices to mitigate US tariffs and as tepid demand for its newest merchandise failed to attract away patrons from upstart athleisure rivals comparable to Vuori.
Lululemon Athletica’s shares slumped 22% in buying and selling after the bell on Thursday.
“We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending,” Lululemon stated in a press release.
President Trump’s chaotic world tariffs have fanned fears that the economic system is headed for stagflation, pushing even wealthier customers to prioritize important purchases.
Corporations are diversifying sourcing and rising costs to mitigate any hit from tariffs, which are anticipated to shrink margins.
“We are planning to take strategic price increases … on a small portion of our assortment, and they will be modest in nature,” Lululemon’s finance chief Meghan Frank stated.
The corporate may also negotiate with distributors and lower prices, Lululemon stated in a submitting.
In 2024, 40% of Lululemon’s merchandise had been manufactured in Vietnam, and 28% of its materials had been sourced from mainland China.
The corporate now expects annual revenue between $14.58 and $14.78 per share, in contrast with earlier expectations of $14.95 to $15.15 every.
Lululemon additionally forecast second-quarter revenue beneath a mean estimate from LSEG. Its income forecast of between $2.54 billion and $2.56 billion was largely in line.
“Lululemon also hasn’t had a lot of huge hit products recently that are having some effect,” stated Morningstar analyst David Swartz.
It launched new attire franchises for women and men — together with the Glow Up activewear assortment and its new way of life trousers Daydrift — however these have completed little to spice up gross sales.
“Lululemon has a history of beating numbers, so even when Lululemon doesn’t raise estimates, that’s considered to be kind of a disappointment,” Swartz added.
