Lululemon shares plummet as tariff prices, rivals – Business News
Lululemon cut its revenue forecast for the 12 months, damage by larger prices to mitigate US tariffs and as tepid demand for its newest merchandise failed to attract away patrons from upstart athleisure rivals such as Vuori.
Lululemon Athletica’s shares slumped 22% in trading 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 mentioned in a assertion.
Although Lululemon has been betting on its new product choices to spice up demand, it’s nonetheless struggling to drum up gross sales as rivals, together with Alo Yoga and Vuori, gain more traction. Getty Images
President Trump’s chaotic international tariffs have fanned fears that the economic system is headed for stagflation, pushing even wealthier consumers to prioritize important purchases.
Companies 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 mentioned.
The company will even negotiate with distributors and cut prices, Lululemon mentioned 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.
In March, Lululemon forecast downbeat annual targets that included a 20-basis-point hit from tariffs. Getty Images
“Lululemon also hasn’t had a lot of huge hit products recently that are having some effect,” mentioned Morningstar analyst David Swartz. REUTERS
The company 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 an average 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,” mentioned Morningstar analyst David Swartz.
It launched new attire franchises for women and men — together with the Glow Up activewear assortment and its new life-style trousers Daydrift — however these have performed 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.
