By Ananya Mariam Rajesh (Reuters) -Lululemon Athletica cut annual profit expectations and forecast second-quarter revenue below estimates on Thursday, as consumer demand waned amid increased competition and a gradual economic slowdown triggered by uncertainty over the Trump administration’s trade policy. Shares of the sportswear maker fell 21% in after-market trading. Although Lululemon has been betting […]
Business
Lululemon tumbles as slowing demand, tariff woes lead to annual profit cut
Audio By Carbonatix
By Ananya Mariam Rajesh
(Reuters) -Lululemon Athletica cut annual profit expectations and forecast second-quarter revenue below estimates on Thursday, as consumer demand waned amid increased competition and a gradual economic slowdown triggered by uncertainty over the Trump administration’s trade policy.
Shares of the sportswear maker fell 21% in after-market trading.
Although Lululemon has been betting on its new product offerings to boost demand, it is still struggling to drum up sales as competitors, including Alo Yoga and Vuori, gain more traction.
This comes at a time when U.S. President Donald Trump’s chaotic tariff implementation on all global trading partners has fanned fears that the economy is headed for tepid growth and stagflation, pushing customers to prioritize essential purchases and not splurge.
“We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending,” Lululemon said.
In March, Lululemon forecast downbeat annual targets that included a 20-basis-point hit from tariffs.
Lululemon said that 40% of its products were manufactured in Vietnam in 2024, and 28% of its fabrics were sourced from mainland China.
The company now expects annual profit between $14.58 and $14.78 per share, compared with previous expectations of $14.95 to $15.15 each.
Lululemon forecast second-quarter revenue between $2.54 billion and $2.56 billion, compared with estimates of $2.56 billion, according to data compiled by LSEG.
It expects second-quarter profit between $2.85 and $2.90 per share, compared with estimates of $3.29.
“Lululemon also hasn’t had a lot of huge hit products recently that are having some effect,” said Morningstar analyst David Swartz.
Lululemon has introduced new apparel franchises for men and women — including the Glow Up activewear collection and its new lifestyle trousers Daydrift — after setbacks in innovations such as its Breezethrough leggings collection.
The company’s first-quarter revenue rose 7% to $2.37 billion, topping estimates of $2.36 billion.
It maintained its annual revenue forecast of $11.15 billion to $11.30 billion.
“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.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Alan Barona)