Quick overview

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Lululemon sank 15% Thursday’s extended trading after the company issued a full-year outlook that was significantly worse than expected. The business exceeded second-quarter earnings estimates, but revenue fell just short of forecasts. It did, however, mention that it expects tariffs to cut its full-year earnings by $240 million.

Wall Street estimates of $14.45 per share are well above Lululemon’s projected earnings of $12.77 to $12.97 per share for the full fiscal year

Additionally, it projects $10. 85 billion to $11 billion in revenue for the entire year, compared to the $11. 18 billion predicted by Wall Street.
“We are disappointed with our U. S. business, even though we saw positive momentum in our international regions overall in the second quarter. Business outcomes and elements of our product’s implementation,” an announcement from CEO Calvin McDonald read. Following the close on Thursday, the company’s stock dropped more than ten percent. The stock has lost over 45% this year.

Lululemon was among the top-performing companies that gained prominence in the athleisure sector. The majority of people stayed home and worked during the pandemic, which sped up this growth. Unfortunately, as its growth slows, competition increases, and tariffs hurt its business, its success has hit a major obstacle. At its peak, Lululemon was the most well-known brand in the athleisure market. More brands have entered the market today, including names like Fabletics, Vuori, Under Armour, The Gap, Adidas, and Nike.

In the second quarter, the company’s net income was $370.9 million, or $3.1 per share, compared to $392.9 million, or $ 3.15 per share, in the same period last year. The Americas experienced a 4% decline in same-store sales. Overall, comparable sales increased by just 1%, while Wall Street had predicted a 2% increase.

The company projects revenues between $2.47 billion and $2.50 billion for the third quarter, compared to the $2.57 billion estimate by Wall Street. It also expects earnings per share to be between $2.18 and $2.23, instead of the estimated $2.93 per share.