Lululemon Athletica Inc. saw its share price plunge by roughly 20% after the company lowered its full-year earnings forecast, despite reporting first-quarter results that beat market expectations. The athletic apparel brand attributed the revision to a “dynamic macroenvironment,” influenced by tariff pressures and more cautious consumer spending, especially in the United States.
For the fiscal first quarter ending May 4, 2025, Lululemon posted earnings per share (EPS) of $2.60, slightly above analysts’ forecast of $2.58 and up from $2.54 in the same period last year.
Revenue climbed 7% year-on-year to $2.37 billion, or 8% on a constant currency basis, supported by growth across product lines, sales channels, and key regions including the U.S. Comparable sales rose by 1%, with a 2% decline in the Americas offset by a 6% increase internationally. The gross margin improved to 58.3%, surpassing expectations.
Despite these encouraging results, the company’s leadership expressed caution about the outlook. CEO Calvin McDonald noted the impact of tariffs and a slowing U.S. economy, stating, “We plan to utilise our solid financial standing and competitive strengths to take proactive measures, while we persist in investing in the growth prospects ahead of us.”
He also remarked on a conference call that U.S. consumers are “cautious and intentional” in their purchasing decisions, showing a more restrained market environment.
Lululemon adjusted its full-year EPS guidance to between $14.58 and $14.78, down from the previous range of $14.95 to $15.15, falling short of the $14.89 average estimate by analysts. However, it maintained its revenue guidance for fiscal 2025 at $11.15 billion to $11.3 billion, expecting 5% to 7% growth (or 7% to 8% excluding an extra week in 2024). This outlook assumes positive growth across all regions, including low to mid-single-digit increases in North America and robust double-digit growth in Mainland China and other international markets.
Chief Financial Officer Meghan Frank revealed plans for “strategic price increases, looking item by item across our assortment,” which aim to mitigate tariff-related cost pressures. These increases will be modest and limited to a small portion of products, beginning in the latter half of the current quarter and continuing into the third quarter. Frank also noted that the company now expects a 110 basis point decline in gross margin for the year, compared to an earlier forecast of a 60 basis point drop, mainly due to rising tariffs.
Lululemon’s supply chain remains diversified, with 40% of its products manufactured in Vietnam and significant production in Cambodia, Sri Lanka, Indonesia, and Bangladesh. The company does not own manufacturing facilities but relies on a network of suppliers, making it vulnerable to tariffs on imports from China and other countries.
Several competitors have also reduced or withdrawn guidance amid tariff uncertainties and shifting consumer demand. Retailers such as Abercrombie & Fitch and Macy’s have cut profit forecasts, while American Eagle Outfitters has withdrawn its full-year guidance entirely. Within the athleticwear sector, rivals like Gap, owner of Athleta, have reported tariff-related cost impacts, and Nike recently announced price rises across many products, though it did not explicitly link these to tariffs.
Looking ahead, Lululemon anticipates second-quarter revenue between $2.54 billion and $2.56 billion, representing 7% to 8% growth, but its EPS forecast of $2.85 to $2.90 falls short of Wall Street’s $3.29 estimate. The company continues to expand its retail presence, having opened three new company-operated stores in the first quarter, bringing its total to 770 locations globally.