Lululemon Shares Plunge 22% After Disappointing Forecast and Tax Concerns

Athleisure brand Lululemon issued a weaker-than-expected earnings forecast and warned of slowing demand and higher tariffs, leading to a 22% drop in after-hours trading.

For Q1 FY2025 (ended May 4), revenue rose 7% to $2.37 billion with adjusted EPS of $2.60, beating analyst expectations. However, Lululemon warned of slower U.S. store traffic due to economic uncertainty and lower consumer confidence.

The company lowered its full-year EPS forecast to $14.58–$14.78, down from the previous $15.15–$15.35 range.

CEO Calvin McDonald noted U.S. sales are under pressure and said the company is adjusting strategies to respond to changing consumer behavior. Tariffs are a growing concern, especially since 40% of products are made in countries like Vietnam and 28% of fabrics come from China.

Shares closed at $330.78 before falling 22% post-market.

Despite expansion efforts and international growth, the company faces mounting challenges from rising tariffs and competition (e.g., Vuori). Other retailers like GAP are facing similar issues.

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