Lululemon’s Stock Takes a Hard Hit Amid Economic Uncertainty and Tariff Challenges
- Tyler White
- 1 day ago
- 2 min read
On Thursday, March 27th, Lululemon, the very popular leader in the athleisure market, disclosed financial results for their fourth quarter and fiscal year ended February 2, 2025. Lululemon reported revenue of $3.61 billion, a 13% increase from the previous year, surpassing the expected $3.57 billion. This rise was boosted by robust holiday sales. However, when adjusted for an extra week in the reporting period compared to 2023, the growth rate adjusts to a less impressive 8%. Earnings per share for the quarter were $6.14, higher than analyst prediction of $5.85.
Despite these strong quarterly earnings, Lululemon’s annual forecast for 2025 disappointed investors. The company projected revenues to be between $11.15 billion and $11.30 billion, slightly below the analysts’ consensus of $11.31 billion. Additionally, it anticipates an EPS range of $14.95 to $15.15, against a consensus estimate of $15.30.
Lululemon lost a whopping 14.19% on Friday March 28th.
The stock’s decline was driven by concerns over slowing growth in core markets, particularly in the United States, where comparable store sales remained flat. In contrast, sales in China soared by 26%. Another significant portion of Lululemon’s forecast downturn is attributed to ongoing tariffs imposed by the U.S. on imports from China and Mexico, as part of broader trade measures put in place by the Trump administration. The company indicated that tariffs alone might lead to a 20 basis point negative to its financials for the year.
Lululemon’s CEO, Calvin McDonald, voiced his concerns on an earnings call, harping on a reduction in consumer spending due to inflation fears and economic uncertainty, which has resulted in slower store traffic across the US market.
As Lululemon strives to overcome these hurdles, the focus will be on its ability to maintain innovation, manage supply chain risks, and effectively respond to global economic shifts. The company’s issues as they relate to the broader economy will be felt by all luxury clothing brand, due to this, Lululemons performance in the upcoming quarters will be closely watched by investors and analysts alike
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