Folks stroll previous a Lululemon division retailer in New York Metropolis on June 5, 2024.
Michael M. Santiago | Getty Pictures
Lululemon beat Wall Avenue expectations for fiscal first-quarter earnings Thursday, however lower its full-year earnings steerage, citing a “dynamic macroenvironment.”
As the corporate navigates tariffs and fears a couple of slowing U.S. economic system, CEO Calvin McDonald mentioned in a information launch that “we intend to leverage our robust monetary place and aggressive benefits to play offense, whereas we proceed to spend money on the expansion alternatives in entrance of us.”
Shares of the attire firm plunged about 20% in prolonged buying and selling.
This is how the corporate did for its first quarter in contrast with what Wall Avenue was anticipating for the quarter ended Could 4, primarily based on a survey of analysts by LSEG:
- Earnings per share: $2.60 vs. $2.58 anticipated
- Income: $2.37 billion vs. $2.36 billion anticipated
The corporate lower its full-year earnings steerage. It expects its full-year earnings per share to be between $14.58 to $14.78. Beforehand, it anticipated full-year earnings per share to be within the vary of $14.95 to $15.15 for the yr. Analysts anticipated earnings per share of $14.89, based on LSEG.
Lululemon’s report comes after a string of shops diminished or withdrew their steerage and mentioned they might hike prices due to uncertainty surrounding President Donald Trump‘s tariff regime. Retailers together with Abercrombie & Fitch and Macy’s slashed their revenue outlooks, whereas others, together with American Eagle Outfitters pulled their full-year steerage altogether.
Amongst Lululemon’s rivals within the athleticwear class particularly, Hole, which owns athleisure model Athleta, reported final week that it expects tariffs to affect its enterprise by $100 million to $150 million. Nike informed CNBC final month it will start raising prices on a variety of merchandise, although it didn’t specify whether or not tariffs had been the explanation for the hikes.
Lululemon reported internet earnings for the fiscal first quarter of $314 million, or $2.60 per share, in contrast with a internet earnings of $321 million, or $2.54 per share, a yr earlier.
First-quarter income rose to $2.37 billion, up from about $2.21 billion throughout the identical interval in 2024.
Lululemon expects second-quarter income to whole between $2.54 billion and $2.56 billion. It additionally anticipates full-year fiscal 2025 income to be $11.15 billion to $11.3 billion — unchanged from its final forecast. Wall Avenue analysts had been anticipating income of $2.56 billion for the second quarter and $11.24 billion for the total yr, based on LSEG.
The activewear firm expects to submit earnings per share within the vary of $2.85 to $2.90 for the second quarter, in comparison with Wall Avenue’s expectation of $3.29, based on LSEG.
Earlier than Trump’s sweeping April 2 tariff announcement, the corporate mentioned throughout its earlier earnings name in March that it anticipated a minimal hit to earnings from tariffs.
Throughout 2024, 40% of Lululemon’s merchandise had been manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 11% in Indonesia, 7% in Bangladesh and the rest in different areas, based on the corporate’s annual report. Lululemon doesn’t personal or function any manufacturing services and depends on suppliers to provide and supply materials for its merchandise, based on the report.
Comparable gross sales rose 1% yr over yr for the quarter, in comparison with the three% Wall Avenue was anticipating, based on StreetAccount. That quantity features a 2% lower within the Americas and a 6% improve internationally.
Gross margin was 58.3%, forward of the 57.7% that analysts had anticipated, based on StreetAccount.
As of Thursday’s shut, LULU inventory has dropped about 13% year-to-date.