Lululemon beat Wall Street expectations for fiscal first-quarter earnings Thursday, but cut its full-year earnings guidance, citing a “dynamic macroenvironment.”
It expects its full-year earnings per share to be between $14.58 to $14.78.
Previously, it expected full-year earnings per share to be in the range of $14.95 to $15.15 for the year.
Retailers including Abercrombie & Fitch and Macy’s slashed their profit outlooks, while others, including American Eagle Outfitters pulled their full-year guidance altogether.
However, Frank said on the earnings call that Lululemon expects full-year gross margins to decrease approximately 110 basis points versus 2024, down from its prior guidance of a 60-basis point drop.
Lululemon reduced its full-year earnings guidance on Thursday, citing a “dynamic macroenvironment,” despite exceeding Wall Street’s expectations for fiscal first-quarter earnings. “.
While the business deals with tariffs and worries about a slowing U.S. S. . In a press statement, CEO Calvin McDonald stated that “we plan to use our competitive advantages and solid financial position to play offensively, while we continue to invest in the growth opportunities in front of us.”. “..”.
He stated that he is “not happy” with U during a conference call with analysts. A. expansion and said U. S. . Customers are choosing their purchases carefully and deliberately.
In an effort to lessen the impact of tariffs, the company intends to implement “strategic price increases, looking item by item across our assortment,” Chief Financial Officer Meghan Frank stated during the call.
In the second half of the current quarter and the beginning of the third, she stated, “It will be price increases on a small portion of our assortments, and they will be modest in nature.”.
About 23% of the clothing company’s shares fell during extended trading.
According to an LSEG survey of analysts, the company’s first-quarter performance was in line with what Wall Street had anticipated for the quarter that ended on May 4.
Earnings per share: $2.60 vs. $2:58 is anticipated.
Revenue: $2.37 billion in comparison to… Expected is $2.36 billion.
The business lowered its earnings outlook for the entire year. It anticipates earning between $14.58 and $14.78 per share for the entire year. In the past, full-year earnings per share were anticipated to be between $14.95 and $15.15. According to LSEG, analysts projected $14.89 in earnings per share.
The report from Lululemon follows a series of retailers who said they would raise prices due to uncertainty surrounding President Donald Trump’s tariff regime and who lowered or retracted their guidance. While some retailers, like American Eagle Outfitters, withdrew their full-year guidance entirely, others, like Abercrombie and Fitch and Macy’s, drastically reduced their profit outlooks.
In particular, Gap, the owner of the athleisure brand Athleta, stated last week that it anticipates tariffs to have a $100 million to $150 million effect on its business, making it one of Lululemon’s competitors in the athleticwear sector. Nike announced to CNBC last month that it would start driving up prices on a variety of items, but it did not say if tariffs were the cause of the price increases.
McDonald admitted the uncertainty that tariffs have caused to the company during Thursday’s earnings call, but he stated that he thinks the brand is “better positioned than most” to handle the current climate.
Lululemon’s fiscal first quarter net income was $314 million, or $2.60 per share, as opposed to $321 million, or $2.54 per share, the previous year.
Revenue for the first quarter increased from roughly $2.21 billion in 2024 to $2.37 billion.
Lululemon projects that its second-quarter revenue will range from $2.54 billion to $2.56 billion. Additionally, it maintains its previous prediction of $11.3 billion to $11.15 billion in full-year fiscal 2025 revenue. According to LSEG, Wall Street analysts projected $3.56 billion in revenue for the second quarter and $11.24 billion for the entire year.
According to LSEG, the sportswear company anticipates reporting second-quarter earnings per share between $2.85 and $2.90, while Wall Street anticipates $3.29.
On the earnings call, Frank stated that the company’s outlook is predicated on the existing 30 percent additional tariff on China and an additional 10 percent levy on the other nations from which the retailer sources.
In 2024, 40 percent of Lululemon’s products were made in Vietnam, 17 percent in Cambodia, 11 percent in Sri Lanka, 11 percent in Indonesia, 7 percent in Bangladesh, and the rest in other places, the company’s annual report stated. According to the report, Lululemon depends on suppliers to manufacture and supply the fabrics for its products because it does not own or run any manufacturing facilities.
StreetAccount reports that comparable sales increased 1 percent year over year for the quarter, instead of the 3 percent Wall Street was expecting. In the Americas, that figure is down 2 percent, while globally, it is up 6 percent.
StreetAccount reports that its gross margin was 58.3%, higher than the 57.7% analysts had predicted.
On the earnings call, however, Frank stated that Lululemon anticipates a full-year gross margin decline of about 110 basis points compared to 2024, which is less than the 60 basis points it had previously predicted. According to her, higher tariffs are the main cause of the discrepancy.
To date, LULU’s stock had fallen roughly 13 percent as of Thursday’s close.
