By Neil J Kanatt and Anuja Bharat Mistry
(Reuters) -Lululemon Athletica said on Thursday that economic uncertainty was dampening demand for its pricey athleisure apparel and U.S. tariffs on imports from China and Mexico had squeezed its forecast for the year.
Lululemon’s shares fell 10% in after-hours trading.
The company’s annual revenue and profit outlook fell short of Wall Street expectations. This included a 20-basis-point hit from tariffs, Lululemon said, joining Walmart and a myriad of firms that have said fresh levies from U.S. President Donald Trump would hurt their businesses.
“Consumers are spending less due to increased concerns about inflation and the economy. This is manifesting itself into slower traffic across the industry in the U.S. in quarter one, which we are experiencing in our business as well,” Lululemon CEO Calvin McDonald said on a post-earnings call.
Tariffs apart, Lululemon has long been struggling with slowing demand as efforts to refresh its product lineup have failed to match rising competition from Alo Yoga and Vuori, whose trendier styles are more appealing to shoppers.
Lululemon expects its fiscal 2025 revenue to be between $11.15 billion and $11.30 billion, compared with the analysts’ estimates of $11.31 billion, according to data compiled by LSEG.
It also expects annual diluted earnings per share of $14.95 to $15.15, compared with the average analysts’ estimate of $15.30 per share.
Comparable sales rose 3% in the fourth quarter, missing a mean estimate of a 4% rise after coming in flat in the Americas. In China, comparable sales rose 26% from a year earlier.
“The Americas biz comped flat year-over-year in 4Q, as inventories are rising and the outlook for ’25 appears muted. The theme remains that growth continues to fade, making further increases in sales and EPS challenging,” Jefferies analysts said.
Lululemon posted quarterly revenue of $3.61 billion, beating estimates of $3.57 billion driven by a stronger holiday season.
It earned a profit of $6.14 per share, above the analysts’ average of $5.85 apiece.
(Reporting by Neil J Kanatt and Anuja Bharat Mistry in Bengaluru; Editing by Alan Barona)
