Lululemon Athletica is a retailer of yoga pants and other yoga wear and has expanded to also sell athletic wear, lifestyle apparel, accessories, and personal care products. The company has 711 stores and also sells online.
But Now, Lululemon Athletica lowered its profit forecast for the year and said after 6 months revenue will be below expectations. This is because of less customer demand due to increased competition and a slow economy caused by worries about Trump’s trade policies.
After this news, Lululemon’s shares fell by 21% in after-hours trading.
Even though Lululemon has launched new products, it is still struggling as competitors like Alo Yoga and Vuori gain popularity.
This is happening during a time when President Trump’s tariff rules have caused worries about slow growth and inflation. Because of this, customers are buying only essential items and not luxury goods.
Lululemon said, “We saw fewer people coming to stores in the Americas due to economic worries, inflation, lower consumer confidence, and changes in spending.”
In March, the company gave cautious yearly forecasts, including a small negative effect from tariffs.
Lululemon said 40% of its products will be made in Vietnam in 2024, and 28% of its fabric will come from China.
Now, the company expects yearly earnings between $14.58 and $14.78 per share, lower than the earlier forecast of $14.95 to $15.15.
For the second quarter, Lululemon expects revenue between $2.54 billion and $2.56 billion, slightly less than the $2.56 billion predicted.
It expects earnings of $2.85 to $2.90 per share for the second quarter, compared to the predicted $3.29.
Analyst David Swartz said, “Lululemon hasn’t had many big hit products lately, affecting sales.”
The company introduced new clothes like the Glow Up activewear and Daydrift trousers after problems with earlier products like Breezethrough leggings.
In the first quarter, Lululemon’s revenue rose 7% to $2.37 billion, beating expectations of $2.36 billion.
The company kept its full-year revenue forecast steady at $11.15 billion to $11.30 billion.
Swartz added, “Lululemon usually beats expectations, so when it doesn’t raise forecasts, investors are disappointed.”
