Latest news with #DavidSwartz
Fashion Network
06-06-2025
- Business
- Fashion Network
Lululemon tumbles as slowing demand, tariff woes lead to annual profit cut
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.
Fashion Network
06-06-2025
- Business
- Fashion Network
Lululemon tumbles as slowing demand, tariff woes lead to annual profit cut
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.
New York Post
05-06-2025
- Business
- New York Post
Lululemon shares plummet as tariff costs, rivals threaten profit outlook
Lululemon cut its profit forecast for the year, hurt by higher costs to mitigate US tariffs and as tepid demand for its latest products failed to draw away buyers from upstart athleisure rivals such as Vuori. Lululemon Athletica's shares slumped 22% in trading after the bell on Thursday. '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 a statement. 3 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. Getty Images President Trump's chaotic global tariffs have fanned fears that the economy is headed for stagflation, pushing even wealthier shoppers to prioritize essential purchases. Companies are diversifying sourcing and increasing prices to mitigate any hit from tariffs, which are expected to shrink margins. 'We are planning to take strategic price increases … on a small portion of our assortment, and they will be modest in nature,' Lululemon's finance chief Meghan Frank said. The company will also negotiate with vendors and cut costs, Lululemon said in a filing. In 2024, 40% of Lululemon's products were manufactured in Vietnam, and 28% of its fabrics were sourced from mainland China. 3 In March, Lululemon forecast downbeat annual targets that included a 20-basis-point hit from tariffs. Getty Images 3 'Lululemon also hasn't had a lot of huge hit products recently that are having some effect,' said Morningstar analyst David Swartz. REUTERS 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 also forecast second-quarter profit below an average estimate from LSEG. Its revenue forecast of between $2.54 billion and $2.56 billion was largely in line. 'Lululemon also hasn't had a lot of huge hit products recently that are having some effect,' said Morningstar analyst David Swartz. It introduced new apparel franchises for men and women — including the Glow Up activewear collection and its new lifestyle trousers Daydrift — but those have done little to boost sales. '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.
Fashion Network
05-06-2025
- Business
- Fashion Network
Lululemon tumbles as slowing demand, tariff woes lead to annual profit cut
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.
Yahoo
05-06-2025
- Business
- Yahoo
Lululemon looking more to China, Europe as its US growth slows
Lululemon Athletica (LULU) stock is sinking in extended hours trading after releasing its first quarter earnings results that came out largely in line with analyst estimates while missing second quarter revenue forecasts. Morningstar senior equity analyst David Swartz reacts to the athleisure brand's quarterly performance and how it is seeking out expansion opportunities in other regions beyond the US and North America. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Let's get more reaction now to Lululemon earnings. For that, we bring in David Swartz, senior equity analyst at Morningstar. David, it's good to see you. Um, what is going on with Lululemon, particularly in the Americas? Is this a competition issue? Is this a merchandise mix issue? Why do you think we are not seeing better performance in their comps in the Americas? I think it's both of those things. Uh, we have seen over the last few quarters, uh, that competition has had some impact on Lululemon, which is unusual because Lululemon historically has always been able to overcome competition. It's really nothing new in this industry. Lululemon has always faced imitators and contenders. Uh, but we have seen some companies like Alo Yoga and Vuori, uh, to name two that have, that have done very well in the, um, the upscale women's athleisure space, and that has affected Lululemon to some degree. Uh, we also have seen a situation which Lululemon has kind of struggled to get the right products into its stores. Uh, the company, um, had a change last year in its design team. Uh, their lead designer, uh, Sancho, left to become president of Vans, and that, that did affect Lululemon, I think, for some time, and there has been a reorganization of that part of the business. I, I still think that Lululemon is very strong in, in product development, uh, but we haven't seen it quite as much recently. And then also, it's just a natural slowing down of Lululemon's business in North America. The company already has stores in all major metropolitan regions in, in the US and Canada. And so it was almost certainty that it would not be able to post the same kind of growth rates that it had in the past. And so that's why it's looking for places like China and Europe, uh, for a lot of future growth. David, what is this company's tariff exposure, and how, how are they navigating that dynamic? Yeah, so like just about everybody else in this industry, Lululemon uses a primarily Asia-based, uh, production, uh, primarily third-party factories. I don't think Lululemon has a lot of direct exposure from China, uh, because like others in this industry, including Nike, a lot of the production in China has shifted to other countries in recent years, and also a lot of the production in China is actually designed for Chinese consumers. And Lululemon has been opening a lot of stores in China, uh, but Lululemon certainly has exposure to countries like Vietnam and other, and other countries in Southeast Asia, uh, which have emerged as major sportswear producers in recent years. Uh, and it does have high exposure to the US. So it, it certainly does have exposure to tariffs, but, uh, Lululemon does have pricing power. Its products are generally more expensive than others, and so I think it can actually raise prices to offset tariffs better than most of their competitors. Um, and what about its business in China? Um, I mentioned before that we saw comps there, um, rise at a faster pace, but that's, that's been the case there than in the Americas. Is that business meeting your expectations? And is that momentum going to continue, do you think? I think maybe it has slowed down a little bit because there were times when we were seeing growth rates over 30% in China. Uh, Lululemon is opening a lot of stores there. Uh, it's still a relatively small business. If you look at competitors like Adidas and Nike, they have thousands of stores in China. So Lululemon could conceivably open many more. Uh, it's, it's a market, though, right now that is troubled. Uh, we've seen some pretty weak results, uh, from sportswear companies in China recently and apparel companies overall, uh, because China's economy has not been very strong, and that's especially true, uh, with high youth unemployment in China, and that's affecting companies like Lululemon sale, like Lululemon. And so, um, you know, we may see a bit of a slowdown there, uh, but it's still a very high potential market for Lululemon. Uh, its market share right now is still very low and awareness is low, and it certainly could be much higher in, in future years. David, correct me if I'm wrong, but I, I believe you have the equivalent of a hold on this name. Uh, so what would you need to see, David, before you were telling clients to get more bullish? Yes, so before today's report, my fair value estimate was $100, it was $315. So it, I thought it was maybe a little bit overvalued. Uh, now with the stock down in, in the aftermarket today, maybe it's a little bit undervalued. Uh, I, you know, I would like to see the company, uh, get its growth rate in the Americas back up a little bit. We're never going to see the same kind of double-digit numbers that we saw in the past, most likely, uh, but if it could get back into, into like the, the single, you know, mid-single digit range, that would certainly impress, um, investors, and I think that could potentially, uh, get the, the price a little bit higher. But, you know, Lululemon stock price tends to be very volatile. At times, it often gets to be quite expensive. Certainly when it was over $500 a share, I was maybe one of the few people who thought it was really expensive and overpriced. Um, but you know, there are buying opportunities. If it continues to, to go down, you know, this could be a buying opportunity in Lululemon, I think, because this is still a very strong company with, with incredible, uh, earnings power and cash flow and no debt. So there's a lot of things to like with this company. David, always great to see you. Appreciate that instant analysis. Thank you. Thanks. 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