MW Lululemon's shares sink on forecast. But it says it plans to 'play offense.'

By Bill Peters

Before the results, TD Cowen analysts said Wall Street's focus would be on same-store sales in North America and executives' remarks on tariffs

Shares of Lululemon Athletica Inc. slid after hours on Thursday, after the yoga-wear and athleisure-gear maker cut its full-year profit outlook and offered a second-quarter forecast that came up short of Wall Street's expectations.

Lululemon said it expects full-year earnings per share of $14.58 to $14.78. That compares with a forecast in March for $14.95 to $15.15. The company stuck with its sales outlook for the period.

For the second quarter, management said it expects sales of $2.535 billion to $2.56 billion, compared with FactSet analyst estimates for $2.56 billion. The company said it expects to earn $2.85 to $2.90 for that quarter, compared with analyst forecasts for $3.29.

In a statement, Chief Executive Calvin McDonald said that while newer products resonated with customers, the broader economic environment was still "dynamic."

"As we navigate the dynamic macroenvironment, we intend to leverage our strong financial position and competitive advantages to play offense, while we continue to invest in the growth opportunities in front of us," he said.

Lululemon shares $(LULU)$ tumbled more than 16% after hours on Thursday.

Before the results, TD Cowen analysts said Wall Street's focus would be on same-store sales in North America and executives' remarks on tariffs, as some consumers continue to put off clothing purchases as they deal with higher prices.

Last year, 40% of Lululemon's products were made in Vietnam. That country faces a reciprocal tariff of 46% from the U.S., although those duties are currently on pause.

Other analysts were pessimistic heading into the results, as Lululemon tries to strengthen U.S. demand and push new products like its Glow Up workout wear and its looser-fitting Daydrift line. However, in March, executives said not enough people were familiar enough with the Lululemon brand.

"It isn't clear to us that more innovation is driving a material uptick in traffic or conversion yet, and we believe this needs to work for LULU to drive consistent domestic growth, and to dispel the narrative that the U.S. is a source of downside risk," Raymond James analyst Rick Patel said in a research note this week.

-Bill Peters

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June 05, 2025 16:34 ET (20:34 GMT)

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