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Lululemon shares suffered a wicked slump today after the athleisure company reported that tariffs are hurting its profitability and dampening consumer demand.
📉 The stock closed down 19.8%.
State of play: Lululemon reduced its earnings forecast, saying that it expects 30% tariffs on Chinese imports and 10% elsewhere.
😬 "My sense is that in the U.S., consumers remain cautious right now, and they are being very intentional about their buying decisions," Lululemon CEO Calvin McDonald said on Thursday's after-hours earnings call.
🏷️ The company is working to source products from alternative locations, but CFO Meghan Frank said the retailer's planning "strategic price increases," which she said would be "modest in nature."
Yes, but: Lululemon is still in growth mode, planning to open 40–45 net new company-run stores in 2025.
🗣️ "We view the steep drop as an overreaction," William Blair analyst Sharon Zackfia writes in a research note, pointing to "fairly stable sales trends" in China, "no uptick in markdowns" and "increased market share in the U.S. in both men's and women's in the first quarter."
