Lululemon shares tumble as weak demand, tariffs – Business News
Lululemon Athletica slashed its annual income and revenue forecasts on Thursday, signaling a slowdown in demand going into the essential vacation season as shoppers cut down spending, alongside tariff pressures.
Shares of the company fell about 14% after the closing bell.
The sportswear maker has didn’t spark a wave of shopping for from shoppers grappling with inflation and the Trump administration’s risky commerce coverage.
Lululemon has didn’t spark a wave of shopping for from shoppers grappling with inflation and the Trump administration’s risky commerce coverage. Bloomberg by way of Getty Images
“Once the trailblazer in athleisure, Lululemon has lost its innovation edge, now squeezed by luxury newcomers like Alo Yoga and private-label dupes with comparable fabric tech at lower prices,” mentioned Suzy Davidkhanian, analyst at eMarketer.
“Copycat culture highlights how far the moat has shrunk.”
The Vancouver, Canada-based company’s dour forecast for the second half of the 12 months comes as US vacation spending is anticipated to see its steepest drop for the reason that pandemic, in line with a PwC survey.
The 2025 outlook consists of a hit of about $240 million on gross revenue, from larger tariffs and the elimination of the de minimis exemption, the company mentioned, with expectations of about a $320 million impression on working margin in 2026.
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De minimis is a US customs exemption that permits duty-free entry and minimal paperwork for worldwide shipments below $800. The exemption elimination grew to become efficient on Aug. 29.
The company, which introduces new product variations each week, mentioned it plans to take strategic and modest price hikes to scale back tariff impression, alongside makes an attempt to cut prices and negotiate with distributors.
The company’s dour forecast for the second half of the 12 months comes as US vacation spending is anticipated to see its steepest drop for the reason that pandemic, in line with a PwC survey. REUTERS
Lululemon manufactured 40% of its merchandise in Vietnam, and sourced 28% of its materials from mainland China, as of 2024, and items imported from these nations to the US face heavy duties.
The yogawear firm now expects annual income between $10.85 billion and $11 billion, in comparison with its prior forecast of $11.15 billion to $11.30 billion.
The annual revenue per share forecast of between $12.77 and $12.97, compares with earlier expectations of $14.58 to $14.78 apiece.
“We believe guidance cuts continue and will become more severe through the end of the fiscal year,” Jefferies analysts mentioned in a notice.
Revenue for the second quarter, ended August 3, rose 7% to $2.53 billion, largely in step with analysts’ expectations, whereas earnings per share of $3.10 beat estimates of $2.88, in line with information compiled by LSEG.
