Lululemon Stock Plummets 18% After Lowering Full-Year Profit Guidance

Lululemon Athletica Inc. (LULU.US) experienced a significant decline in its stock price, falling over 18% to $269.79 on Friday. The drop was triggered by the company's announcement of its first-quarter fiscal 2025 earnings and a subsequent reduction in its full-year profit guidance. The company reported a 7% year-over-year increase in net revenue to $2.37 billion, slightly above the expected $2.36 billion. However, the net profit of $314 million was lower than the previous year's figure of $321 million.

The company's decision to lower its full-year earnings forecast was influenced by several factors, including increased costs and operational challenges. The first-quarter results showed a 1% growth in comparable sales, indicating a slower pace of expansion compared to previous quarters. This slower growth, combined with the company's decision to raise prices on certain products due to tariff pressures, contributed to the market's negative reaction.

For the full year 2025, Lululemon expects revenue to be in the range of $11.15 billion to $11.3 billion, with analysts previously expecting $11.24 billion. The company also revised its full-year earnings per share guidance to between $14.58 and $14.78, down from the previous range of $14.95 to $15.15. Analysts had expected earnings per share of $14.89. Lululemon highlighted that the increased tariffs in the United States have raised its operational costs, potentially leading to a significant decline in profitability.

Analysts had mixed reactions to the earnings report and the revised guidance. Some analysts maintained a positive outlook on the company, citing its strong brand and loyal customer base. However, others expressed concerns about the company's ability to navigate the current economic environment and maintain its growth trajectory. The company's decision to raise prices on certain products due to tariff pressures was also a point of discussion among analysts. While some saw this as a necessary measure to offset increased costs, others were concerned about the potential impact on consumer demand. The company has stated that it will continue to monitor the situation and make adjustments as needed to ensure its long-term success.

Overall, the market's reaction to Lululemon's earnings report and revised guidance was largely negative, with the stock price falling significantly. However, the company's strong brand and loyal customer base may help it weather the current challenges and continue to grow in the long term. Investors will be closely watching the company's performance in the coming quarters to see how it navigates the current economic environment and maintains its growth trajectory.