Shares of Lululemon Athletica (LULU) plummeted 22.31% in after-hours trading on Thursday following the company's first-quarter earnings report and reduced annual profit forecast. The steep decline came as investors reacted to disappointing guidance that pointed to slowing growth and economic pressures.

While Lululemon's Q1 revenue of $2.37 billion slightly beat analyst expectations, the company slashed its full-year earnings guidance, now projecting EPS between $14.58 and $14.78, down from the previous forecast of $14.95 to $15.15. This reduction was primarily attributed to the impact of tariffs and slightly higher expected markdowns.

CEO Calvin McDonald cited a "dynamic macroenvironment" and noted that U.S. consumers remain cautious and intentional about their buying decisions. The company is grappling with lower store traffic in the Americas, which executives linked to economic uncertainty, inflationary pressures, and changes in discretionary spending.

Adding to investor concerns, Lululemon provided weaker-than-expected guidance for the second quarter. The company anticipates Q2 EPS of $2.85-$2.90, falling well short of analyst projections of $3.29 per share. This outlook suggests a significant deceleration in growth compared to recent quarters.

Lululemon plans to implement strategic price increases on a small portion of its assortment and pursue supply chain efficiencies to mitigate the impact of tariffs. However, these efforts are expected to have a more pronounced effect in the second half of the year, leaving near-term profitability under pressure.

The disappointing forecast comes as Lululemon faces a challenging retail environment characterized by cautious consumer spending and the ongoing impact of tariffs on imports from key sourcing countries. As the company navigates these headwinds, investors will be closely watching for signs of how effectively it can maintain its market position and drive growth in an increasingly competitive athleisure market.