Lululemon tumbles as slowing demand, tariff woes lead to annual profit cut
Lululemon Athletica cut annual profit expectations and forecast second-quarter revenue below estimates on Thursday, as consumer demand waned amid increased competition and a gradual economic slowdown triggered by uncertainty over the Trump administration's trade policy.
Shares of the sportswear maker fell 21% in after-market trading.
Although Lululemon has been betting on its new product offerings to boost demand, it is still struggling to drum up sales as competitors, including Alo Yoga and Vuori, gain more traction.
This comes at a time when U.S. President Donald Trump 's chaotic tariff implementation on all global trading partners has fanned fears that the economy is headed for tepid growth and stagflation, pushing customers to prioritize essential purchases and not splurge.
"We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending," Lululemon said.
In March, Lululemon forecast downbeat annual targets that included a 20-basis-point hit from tariffs.
Lululemon said that 40% of its products were manufactured in Vietnam in 2024, and 28% of its fabrics were sourced from mainland China.
The company now expects annual profit between $14.58 and $14.78 per share, compared with previous expectations of $14.95 to $15.15 each.
Lululemon forecast second-quarter revenue between $2.54 billion and $2.56 billion, compared with estimates of $2.56 billion, according to data compiled by LSEG.
It expects second-quarter profit between $2.85 and $2.90 per share, compared with estimates of $3.29.
"Lululemon also hasn't had a lot of huge hit products recently that are having some effect," said Morningstar analyst David Swartz.
Lululemon has introduced new apparel franchises for men and women — including the Glow Up activewear collection and its new lifestyle trousers Daydrift — after setbacks in innovations such as its Breezethrough leggings collection.
The company's first-quarter revenue rose 7% to $2.37 billion, topping estimates of $2.36 billion.
It maintained its annual revenue forecast of $11.15 billion to $11.30 billion.
"Lululemon has a history of beating numbers, so even when Lululemon doesn't raise estimates, that's considered to be kind of a disappointment," Swartz added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
France 24
8 hours ago
- France 24
South Korea counts on shipbuilding to ease US tariff woes
Already hit by sector levies on steel and car exports, Seoul is laser-focused on negotiations over a 25 percent country-specific tariff that has been suspended until July 8. AFP takes a look at what's going on: Why shipbuilding? In the 1970s, South Korea's military leader president Park Chung-hee accelerated the country's heavy industry, designating sectors such as steel and shipbuilding "strategically important" and rolling out state subsidies. At the same time, POSCO was founded -- now one of the world's largest steel producers -- and conglomerate Hyundai built its shipyard in southeastern Ulsan, which started to grow rapidly. European rivals struggled to keep pace. Sweden's Kockums Shipyard filed for bankruptcy in 1987 -- and in a symbolic shift of global shipbuilding power, Hyundai acquired its 140-metre (460-foot) Goliath crane for one dollar. It now towers over southern Ulsan. In the 1990s and 2000s, South Korean shipbuilders such as Hyundai Heavy Industries and Samsung Heavy Industries ramped up investment in research and development, backed by generous government subsidies. The country secured a competitive edge in high-value-added vessels, including LNG carriers, very large crude carriers, and offshore platforms. Now, South Korea ranks as the world's second-largest shipbuilding nation, trailing only behind China. Is it important? South Korea's exports hit a record high in 2024, with analysts pointing to shipbuilding as one of the key drivers. The sector accounted for nearly four percent of total exports and grew by almost 20 percent from the previous year -- reaching $25.6 billion. Shipbuilding directly employs around 120,000 workers -- roughly one percent of the country's total workforce -- with indirect employment significantly higher in industrial hubs like Ulsan. Industry data shows so far this year, new orders have exceeded 13 trillion won ($9.4 billion). In March, Hanwha Ocean secured a landmark $1.6 billion contract to build LNG carriers for Taiwan's Evergreen Marine, one of the largest single orders in the sector this year. - Why is it a 'bargaining chip'? - Trump has showed "significant interest in South Korea-US shipbuilding cooperation," said South Korea's trade, industry and energy minister Ahn Duk-geun in April. Like the Europeans, the US shipbuilding industry has lagged behind South Korea and China, and as a result, the sector is seen as a "highly important bargaining chip in trade negotiations," he added. At an APEC finance ministers' meeting in South Korea in May, US Trade Representative Jamieson Greer met Chung Ki-sun, vice chairman of HD Hyundai, the country's largest shipbuilder, before he met Seoul's top officials. "South Korea's shipbuilding and defence industries see a window of opportunity," said Kim Dae-jong, a professor at Sejong University. How does it help the US? Greer also met with the CEO of Hanwha Ocean, the first non-American company authorised to carry out a dry-dock maintenance of a US Navy vessel. The move last September was seen as significant as it signalled that Washington sees South Korea, where it already has 28,000 US troops stationed, as a strategic defence hub. With worries growing about China's expanding naval fleet and potential conflict in the Taiwan Strait, the US has begun seeking reliable overseas shipyards to support its operations in the Asia-Pacific region. The global market for ship maintenance, repair, and overhaul is projected to exceed $60 billion annually, according to industry estimates. Any problems? Despite multi-billion-dollar contracts, data suggests South Korea's shipbuilding industry is losing ground in the global race. China dominates with South Korea's market share dropping, according to industry data. Demand for eco-friendly vessels is rising, and the government need to overhaul regulations "to support the development of next-generation eco-friendly vessels," Rhee Shin-hyung, a professor at Seoul National University, told AFP. South Korea's woeful demographics also make staffing hard. In Geoje -– home to Samsung Heavy Industries -– the number of residents in their 20s and 30s has nearly halved in recent years. Orders are down in 2025 which hints that "the shipbuilding boom may end sooner than the market anticipated," warned Rhee. Global ship orders between January and April fell by almost half the volume recorded during the same period last year. Shipbuilders have been enjoying a "supercycle" but unfortunately the "peak is expected to be lower and the boom shorter-lived compared to the past," Nam Chul, vice president at HD Hyundai Heavy Industries, told AFP.
France 24
8 hours ago
- France 24
Tesla expected to launch long-discussed robotaxi service
The launch -- which comes as Musk refocuses on his business ventures following a controversial stint in Donald Trump's administration -- will employ the Model Y sport utility vehicle rather than Tesla's much-touted Cybercab, which is still under development. The long-awaited launch follows the dramatic meltdown earlier this month in relations between Musk and Trump, which saw a cascade of bitter attacks from both men. Since then, Musk has publicly expressed regret for some of his statements, while his company's Texas operation has readied the Austin push -- part of a major drive on autonomous technology and artificial intelligence that Tesla bulls believe will yield huge profits. This group includes Wedbush analyst Daniel Ives, who said autonomous technology could be a catalyst for potentially $1 trillion in additional market value or more. "There are countless skeptics of the Tesla robotaxi vision with many bears thinking this day would never come," said Ives, who predicted that Trump's administration would clear roadblocks for Tesla and pivot from the recent "soap opera." "The golden era of autonomous for Tesla officially kicks off on Sunday in Austin," Ives said in a note Friday. Business-friendly Texas But the unveiling in the Texas state capital comes amid questions about how Tesla will try to overcome criticism of Musk's activities for Trump. Tesla saw profits plunge 71 percent in the first quarter following poor sales in several markets. In picking Austin for the debut of the autonomous vehicle (AV) service, Musk is opting for a US state known for its company-friendly approach to regulation. "Texas law allows for AV testing and operations on Texas roadways as long as they meet the same safety and insurance requirements as every other vehicle on the road," the Texas Department of Transportation told AFP. An Austin website listed six autonomous vehicle companies at various stages of operation: ADMT (Volkswagen), AVRide, Tesla, Zoox (Amazon), Motional (Hyundai) and Waymo (Alphabet/Google). But the Texas legislature this year enacted a new bill that requires prior authorization from the state's Department of Motor Vehicles before companies can operate on a public street without human drivers, a group of seven Democratic lawmakers said in a June 18 letter to Tesla. Citing the enhanced system, the lawmakers asked Tesla to delay testing until after the law takes effect September 1. If Tesla proceeds with the launch this weekend, "we request that you respond to this letter with detailed information demonstrating that Tesla will be compliant with the new law," the letter said. Starting slow Musk had initially planned the launch for June 12, before pushing back, saying he was being "super paranoid" about safety. "We want to deliberately take it slow," Musk said in a May 20 interview on CNBC, telling the network that Tesla would probably only operate 10 autonomous vehicles the first week. But that number will rise to perhaps 1,000 "within a few months," Musk told CNBC. "And then we will expand to other cities.... San Francisco, Los Angeles, San Antonio." The service will be offered from 6:00 am until midnight and will be available to "early access" users on an invitation-only basis in a geofenced area, Tesla owner Sawyer Merritt said Friday on Musk's X platform, adding that Tesla had given him permission to release the information. Musk last fall unveiled the Cybercab, which has no steering wheel or pedals. But production is not expected to begin on the vehicle until 2026. Tesla's robotaxi launch comes well after Waymo's offering of commercial robotaxi service, with more US cities gradually added. The US National Highway Traffic Safety Administration (NHTSA) in October 2024 opened a probe into Tesla's Full Self-Driving (FSD) software after receiving four reports of crashes. The NHTSA on May 8 asked Tesla for additional information on its technology in light of the Austin launch. But the NHTSA does not "pre-approve" new technologies, the agency told AFP. "Rather, manufacturers certify that each vehicle meets NHTSA's rigorous safety standards, and the agency investigates incidents involving potential safety defects," the NHTSA said. © 2025 AFP
LeMonde
16 hours ago
- LeMonde
Patrick Artus: 'In the US, attacks on the public research system and universities compromise growth prospects'
The United States, inevitably, is heading for very weak economic growth in 2025. The economic policies being pursued – higher tariffs and restrictions on immigration – have already had visible effects on inflation expectations. These expectations have jumped to as high as 7% over one year, according to a survey of American households by The Conference Board, and up to 6.5%, according to another survey by the University of Michigan. The prospect of high inflation is very unfavorable for US household consumption, since in the US, wages are only very partially indexed to prices. Therefore, under these circumstances, it is not surprising that US consumer confidence about the economic situation in six months has collapsed, according to The Conference Board survey, with the confidence index dropping to 73, compared to 85 at the end of 2024. Furthermore, inflation expectations are being reinforced by the fight against illegal immigration (even though, under Joe Biden's presidency, net migration reached 1.5 million people per year). This has led to a slowdown in household consumption: Its annual growth fell from 4% in the fourth quarter of 2024 to 1.8% in the first quarter of 2025. Over the same periods, the growth in goods production dropped from 6.2% to 0.5%. Backtracking It is likely that these growth-damaging policies will be loosened. Tariffs on US imports of electronics and automotive parts have already been removed. Donald Trump has reduced tariffs on US imports from China from 145% to 30%. The decline in the US president's popularity in polls, as well as his inability to implement economic policies favorable to the US economy, should lead to more backtracking. In the US, immigrants are, on average, more highly educated than native-born Americans. Proportionally, they create nearly twice as many businesses. Foreign-born residents make up 14.3% of the population, but 23.6% of entrepreneurs and 23.6% of employees in technology, engineering, and science. As with tariffs, Trump's anti-immigration policy does not appear sustainable.
