Lululemon Shares Plunge After Slashing Annual Forecast

Lululemon Athletica Inc. shares plunged nearly 15% in after-hours trading after the company , signaling significant headwinds from U.S. tariffs and a slowdown in consumer spending.

The athletic apparel retailer announced it was lowering its full-year revenue guidance to a range of $10.85 billion to $11 billion, down from a prior forecast of $11.15 billion to $11.3 billion. The outlook for profitability saw an even steeper cut, with expected earnings per share now pegged between $12.77 and $12.97, a significant drop from the previous range of $14.58 to $14.78.

The revised guidance includes an estimated $240 million negative impact on gross margin, which the company attributes to higher U.S. tariffs and the recent removal of the "de minimis" customs exemption that had allowed for duty-free imports on smaller shipments. This policy change directly affects Lululemon, which manufactured 40% of its products in Vietnam and sourced 28% of its fabrics from mainland China as of 2024.

"In the second quarter, we exceeded expectations on EPS, but revenue fell short of our guidance, driven predominantly by our U.S. business," said Chief Financial Officer Meghan Frank in a statement. "We are also , including higher tariff rates."

For its second quarter, Lululemon reported revenue growth of 7% to $2.53 billion, which was roughly in line with analyst expectations but fell short of the company's own guidance. Same-store sales rose just 1%. While earnings per share of $3.10 beat Wall Street estimates, the top-line weakness and grim forward-looking statement spooked investors, sending them rushing for the exits in post-market trading.

The dour forecast suggests the sportswear maker is facing mounting pressure as consumers, particularly in the U.S., grapple with inflation and pull back on discretionary spending. The warning comes ahead of the crucial holiday shopping season, a period that now appears fraught with uncertainty for the high-end apparel brand.