Canadian yoga apparel manufacturer Lululemon saw its stock price plummet over 21.6% in after-hours trading on Thursday (June 5), closing at US$259.3.
In its first-quarter results ending May 4, Lululemon reported a revenue increase of 7.2% year-on-year to US$2.37 billion, slightly above analysts' expectations of US$2.36 billion. However, net profit fell 2.2% year-on-year to US$314 million, with adjusted earnings per share of US$2.6, compared to the expected US$2.58.
Due to the turbulent macroeconomic environment, Lululemon has revised its annual earnings per share forecast down from US$14.95 to US$15.15 to a new range of US$14.58 to US$14.78, while the market expected US$14.89. The company maintained its full-year revenue forecast at US$11.15 billion to US$11.3 billion, with market expectations at US$11.24 billion. CEO Calvin McDonald stated that in light of tariffs potentially leading to a slowdown in the US economy, the company will adopt a cautious financial approach while actively seeking opportunities.
Additionally, increasing competition and promotional activities in the apparel industry, along with ongoing inflation, have hindered the company's growth. 2025 is expected to mark the fifth consecutive year of slowing sales growth for Lululemon. The management team is attempting to boost demand by entering new product categories and expanding into sports such as running, tennis, and golf.
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