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Yahoo
12-06-2025
- Business
- Yahoo
LULU Q1 Earnings Call: Management Addresses Margin Headwinds, International Growth, and U.S. Consumer Shifts
Athletic apparel retailer Lululemon (NASDAQ:LULU) met Wall Street's revenue expectations in Q1 CY2025, with sales up 7.3% year on year to $2.37 billion. On the other hand, next quarter's revenue guidance of $2.55 billion was less impressive, coming in 0.7% below analysts' estimates. Its GAAP profit of $2.60 per share was 0.5% above analysts' consensus estimates. Is now the time to buy LULU? Find out in our full research report (it's free). Revenue: $2.37 billion vs analyst estimates of $2.37 billion (7.3% year-on-year growth, in line) EPS (GAAP): $2.60 vs analyst estimates of $2.59 (0.5% beat) The company reconfirmed its revenue guidance for the full year of $11.23 billion at the midpoint EPS (GAAP) guidance for the full year is $14.68 at the midpoint, missing analyst estimates by 1.8% Operating Margin: 18.5%, down from 19.6% in the same quarter last year Locations: 770 at quarter end, up from 711 in the same quarter last year Same-Store Sales rose 1% year on year (6% in the same quarter last year) Market Capitalization: $30.23 billion Lululemon's first quarter results reflected a combination of shifting consumer behavior in the United States and continued momentum in international markets. Management emphasized that U.S. consumers remain cautious, with CEO Calvin McDonald stating, 'Consumers remain intentional about their buying decisions,' despite Lululemon gaining market share in the premium athletic wear segment. Internationally, the company reported strong growth in China and the broader APAC and EMEA regions, aided by new store openings and brand activations, such as the Summer of Align campaign. Product innovation, including launches like Daydrift and Align No Line, contributed to guest engagement and supported sales across both athletic and lifestyle categories. Looking ahead, Lululemon's outlook is shaped by several external and internal factors, including tariffs, ongoing investments in new markets, and evolving consumer trends. CFO Meghan Frank highlighted that gross margin pressure will intensify in the near term due to increased tariffs and foundational investments, but mitigation strategies—such as selective price increases and supply chain efficiencies—are expected to gain traction later in the year. McDonald underscored that while the U.S. market faces headwinds, the company will continue to invest in innovation and global expansion, aiming to leverage its strong balance sheet. Management believes its diversified product pipeline and international growth will help offset margin pressures. Management attributed the quarter's performance to cautious U.S. consumer behavior, strong international expansion, and ongoing product innovation. Margin pressure was mainly linked to tariffs and strategic cost increases. U.S. consumer caution: Leadership noted that U.S. store traffic declined relative to last year, and purchasing behavior remains deliberate. However, Lululemon reported modest revenue growth in the U.S. and asserted it gained market share in premium athletic wear segments. International market strength: China Mainland and other international regions delivered double-digit sales growth, with McDonald highlighting expansion into new markets like Denmark and Turkey, and upcoming entries into Italy, Belgium, and the Czech Republic. Product innovation and newness: The company pointed to strong guest response for new product launches like Daydrift trousers, Be Calm, Glow Up leggings, and the Align No Line update. Early sell-through rates were high, leading to plans for broader distribution in the fall. Brand campaigns and engagement: Lululemon increased brand awareness through campaigns such as the Summer of Align, featuring global events and influencer partnerships. Management reported a rise in unaided brand awareness in the U.S. from the mid-30s to 40%. Tariff and margin headwinds: CFO Meghan Frank explained that higher tariffs and modestly elevated markdowns were the main drivers behind the decline in operating margin, with mitigation efforts focusing on selective pricing actions and supply chain efficiencies expected to have a larger effect in the second half of the year. Lululemon expects external cost pressures and consumer trends to shape revenue growth and margins over the next several quarters. Tariff impact and mitigation: Management identified tariffs as a primary driver of margin compression in the near term. Frank stated that mitigation actions—such as targeted price increases and sourcing adjustments—will become more significant later in the year, with the expectation that these measures will help offset higher costs. Continued global expansion: The company plans to open 40 to 45 new stores in 2025, with the majority outside the U.S., focusing especially on China. Management believes international markets remain underpenetrated, providing a long runway for growth. Product pipeline and consumer response: Leadership emphasized the importance of new product launches and innovation to drive sales. They plan to expand both technical and lifestyle categories, responding to consumer preferences for newness, while closely monitoring U.S. traffic and macroeconomic headwinds. In future quarters, the StockStory team will be monitoring (1) whether mitigation strategies for tariffs and cost inflation are reflected in improved gross margin, (2) signs of U.S. traffic stabilization or recovery, and (3) continued robust international growth, particularly in China and new markets. Progress in executing new product launches and maintaining brand engagement will also be closely tracked. Lululemon currently trades at a forward P/E ratio of 16.6×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
Miami Herald
09-06-2025
- Business
- Miami Herald
Bad news for Lululemon customers as new tariffs take a toll
I haven't bought new Lululemon clothing since, I don't know…2017? (Yes, they're still going strong.) But recently, I put on a pair of leggings and noticed my dog Bentley may or may not have chewed a hole or two (let's just say he's lucky he's cute). Anyways, I decided it was probably time for a long-overdue mini Lululemon shopping spree. Obviously, I'm not in a rush (despite Bentley's best efforts). Still, I've been slowly making a mental list of all the fun new things I want to buy. Related: Lululemon rival, Alo Yoga sued over social media claims But now? I might need to rethink that plan. The brand just raised a red flag on its latest earnings call-and while most shoppers haven't heard about it yet, new cost pressures could soon start affecting what customers pay in stores and online. In other words: If you're planning to stock up on your favorite Align leggings, that go-to Define jacket, or even a few pairs of men's underwear (don't worry, fellas - I've got your back too), you may want to do it sooner rather than later. The new tariffs are already taking a bite out of Lululemon's profits. The company says it expects to make less money on each item it sells this year compared to 2024-and it's pointing to rising import costs as the reason why. "That's all driven by the net impact of tariffs," CFO Meghan Frank said on the earnings call. The new U.S. tariffs on apparel sourced from China and other markets are forcing Lululemon ( (LULU) ) to rethink its pricing and sourcing strategy. Related: Lululemon's latest viral product reveals something much bigger The company is taking a measured approach: it will implement modest price increases on select items in its assortment, while working with vendors to find supply chain efficiencies. "We've looked across the enterprise for how we can offset increased tariff rates," CEO Calvin McDonald said. "Our work streams include managing expenses, identifying efficiencies within our supply chain, and evaluating our position in the marketplace related to pricing." While some mitigation efforts will take effect later this year and into 2026, Lululemon says shoppers should expect to see higher prices on some items in the near future. For Lululemon customers, the tariff squeeze means a few things. First, while the brand's leadership emphasized that most price increases will be modest and selective, they are coming-and could hit popular categories like leggings, tops, and lifestyle products. Second, as Lululemon adjusts sourcing and manages costs, it may impact product availability and assortment During the call, executives highlighted that Lululemon's strong demand in core categories like Align leggings and new product hits like Daydrift and Glow-Up leggings puts it in a good position to manage pricing and innovation going forward. Finally, even with $1.3 billion in cash and no debt, Lululemon is proving that no brand is immune when tariffs hit this hard. U.S. shoppers are already showing signs of caution, and further price increases could affect purchase behavior. "We believe our guests will continue to live an active and healthy lifestyle and turn to us for the technical apparel we are known for," McDonald said. But as tariffs keep squeezing Lululemon's margins, customers should brace themselves-their next shopping trip could come with some unwanted sticker shock. Guess I better get moving with that trip to Lululemon. Related: Lululemon analysts reboot stock price target after earnings The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
New York Post
06-06-2025
- Business
- New York Post
Lululemon fans furious as tariffs threaten to drive prices even higher amid stock plunge
Lululemon lovers are already stretching their wallets to the limit — and now they've had enough. Fans and critics alike were clucking their tongues Friday after the athleisure giant warned customers they'd soon be paying even more for already-pricey workout gear — following a whopping stock nosedive. The culprit? President Donald Trump's tariffs — and, apparently, broke Americans tightening their purse strings. Advertisement 'We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending,' the company said in a recent statement. Translation: Even the brand's cult-following of millennial and Gen Z yoga bunnies aren't splurging $128 on leggings like they used to. 4 Even Lululemon's loyal legging junkies — from millennial moms to Gen Z gym rats — are tightening their waistbands on those $128 yoga pants. Bloomberg via Getty Images Advertisement Execs are scrambling as the one-time Wall Street darling fell short of analyst predictions, seeing just a 1% increase in sales year-over-year, falling short of the 3% forecast. 'We are planning to take strategic price increases … on a small portion of our assortment, and they will be modest in nature,' chief financial officer Meghan Frank said on an earnings call, adding the hikes will roll out within weeks. 'It will be price increases on a small portion of our assortments, and they will be modest in nature,' she claimed. 4 The blame for all this? President Trump's tariffs — and cash-strapped shoppers cutting back. REUTERS Advertisement CEO Calvin McDonald admitted he was 'not happy' with U.S. growth figures and blamed the belt-tightening on skittish shoppers. 'We experienced lower store traffic … lower consumer confidence,' he echoed. While some may point to floundering new lines like the Glow Up collection or Daydrift trousers, the company is pinning the blame on tariffs — particularly those slapped on goods made in Vietnam and China, where the company sources most of its fabrics. In 2024, 40% of Lululemon's products were made in Vietnam, and 28% of its fabrics came from mainland China — both hit hard by Trump's trade crackdown. Advertisement Now, Lulu says it's working to cut costs and negotiate with vendors to offset the tariff hit. But customers aren't exactly downward dogging in support. On X, disgruntled users lashed out at the brand's pricing and manufacturing decisions. 4 The athleisure company says it's trimming costs and haggling with vendors to ease the tariff pain — but shoppers aren't exactly striking a warrior pose in approval. SOPA Images/LightRocket via Getty Images 'You better get it together. Lulu. Using tariffs as an excuse in your rest of the year outlook is not a smart move. Amazon/Walmart tried this it didn't go well. You're Down 65$ today. Our family was a big lulu fan not so much anymore,' one raged. 'For what they charge for their products, you'd think it was made in America,' snapped another. 'It can't be that yoga pants shouldn't cost $125 a pair. No. That's not it,' someone joked. Others were more blunt: 'Their stuff is ridiculously overpriced… total ripoff.' 'Lululemon's collapse isn't about tariffs — it's about betting on foreign manufacturing while ignoring American resilience,' one critic seethed. Advertisement They continued, 'Relocating production… was always a gamble, and now they're paying for it.' Some simply slammed the entire brand: 'Lululemon clothing is so overpriced — always has been. Only the Gen Zers think its the name on them that make them special.' 4 In 2024, Lulu pumped out 40% of its gear in Vietnam and got 28% of its fabrics from China — two prime targets in Trump's tariff smackdown. Bloomberg via Getty Images Advertisement Another scorched: 'Stupid rich women paying exorbitant prices for stretch pants. SMH.' Despite the backlash, Lululemon doesn't appear to be sweating just yet — but with costs climbing and customers stretching their budgets, the future might not be quite so flexible.
Yahoo
06-06-2025
- Business
- Yahoo
Lululemon to raise prices as progress stalls in the US
This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter. Lululemon is raising prices and prepping for a hit to gross margin as tariffs sweep the industry, executives said on a Thursday earnings call. CFO Meghan Frank said the price increases would be modest, strategic and apply to just a small portion of its assortment. They'll go into effect in the second half of Q2 and into Q3. The retailer largely maintained its guidance for the year, calling for roughly 5% to 7% revenue growth, but lowered earnings per share estimates. Lululemon also said margins would decrease more than planned given the current 30% tariffs on China and 10% on remaining countries. Gross margin is expected to decline by 110 basis points this year, compared to previous guidance for a 60 basis-point decrease. Revenue in the quarter was up 7% to $2.4 billion, with growth in the Americas landing at 3% and international up 19%. Comps in the quarter grew just 1% thanks entirely to international, as comps fell 2% in the Americas. While Needham analyst Tom Nikic called Lululemon's results 'fairly lackluster,' he and others noted that the market's reaction was outsized compared to the retailer's actual performance, especially given that guidance cuts were the result of tariffs. 'That said, the domestic business remains sluggish and international comp growth slowed dramatically in Q1, likely raising questions about the growth [algorithm] from here,' Nikic said in emailed comments. Lululemon store traffic declined in the quarter, especially in the U.S. market, Frank said. CEO Calvin McDonald noted that those shoppers in particular are being cautious about spending right now, making a recovery in the region more difficult. 'We're not seeing the same discerning consumer in Canada as we are seeing in the U.S. in terms of traffic as well as some other metrics that we monitor,' he said. He stressed that Lululemon still gained share across both men and women in the U.S. and said shoppers are responding well to newness in the assortment, including the No Line Align legging and the Daydrift trouser. The leggings will be in all the retailer's stores by September and the Daydrift will be restocked around the same time, potentially leading to more upside ahead. Wells Fargo analysts noted that newness has now returned to historic levels after the retailer last year fell short on choices for U.S. shoppers, but analysts were overall disappointed in the somewhat lengthy timeline for product rollouts and the lack of progress in the U.S. While analysts expected stabilization in the U.S., Wells Fargo said 'we received the opposite,' and Jefferies analysts noted bleakly that the Americas 'keeps getting worse.' 'Despite this decline, [management] continues to prioritize product newness and China expansion over addressing a pullback from core customers and evident traffic declines. We believe this misalignment is concerning,' Jefferies analysts led by Randal Konik said in emailed comments. 'Fixing the Americas should be the top priority given its size (75% mix), yet the focus on newness isn't resonating broadly and the unaddressed rise in competition has led to increased promotions.' Sign in to access your portfolio
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.
