Shares of Lululemon Athletica (NASDAQ: LULU) tumbled as much as 15% in after-hours trading on Thursday after the athletic apparel maker slashed its full-year sales and profit forecast, rattling investors who had expected steadier growth from one of the retail sector’s most resilient brands.
The drop came despite Lululemon reporting better-than-expected earnings for the second quarter. Revenue reached $2.53 billion, narrowly missing Wall Street’s forecast of $2.54 billion, while earnings per share came in at $3.10, well ahead of the $2.86 expected.
Why the Stock Fell
The upbeat earnings were quickly overshadowed by a sharp downward revision in guidance.
Lululemon now expects full-year revenue between $10.85 billion and $11.0 billion, down from its prior projection of $11.15 billion to $11.30 billion. Profit expectations were also trimmed to $12.77–$12.97 per share, compared with the earlier range of $14.58–$14.78.
Several factors weighed heavily on the outlook:
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Tariff Pressures: Management warned of a $240 million hit to gross profit this year, stemming from the removal of the de minimis exemption and escalating U.S. tariffs.
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Weak U.S. Sales: Comparable sales in North America slipped around 4%, signaling that consumer appetite in Lululemon’s home market is softening.
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Product Fatigue: CEO Calvin McDonald admitted the brand has grown “too predictable,” with a reliance on existing designs weighing on new demand. The company plans to raise the share of new styles from 23% to 35% by next spring in an effort to reinvigorate its product lineup.
The Bigger Picture
While the U.S. market showed signs of strain, international demand remains strong. Same-store sales in China surged 17%, while other international markets recorded double-digit growth of 12%.
Analysts note this expansion could provide a buffer as Lululemon navigates U.S. headwinds.
Industry-wide challenges also play a role. Athletic apparel companies are facing slower discretionary spending, higher import costs, and rising competition from both established rivals like Nike and new direct-to-consumer brands.
Future Prospects
Despite the steep selloff, some market watchers argue that the long-term story is not broken. Lululemon’s strong international momentum, loyal customer base, and brand positioning in the premium segment provide a platform for recovery.
“Lululemon is facing a near-term reset, but its global growth trajectory and planned product refreshes could reignite momentum by 2026,” said one analyst note from Barclays.
Others caution that the stock may remain under pressure until investors see evidence of a rebound in U.S. sales and successful adaptation to the tariff environment.
For now, the company’s shares are likely to remain volatile, caught between the weight of lower guidance and the promise of international growth.
Bottom Line: Lululemon’s stock plunge reflects deeper challenges in its core U.S. market and rising cost pressures from tariffs.
But with robust international performance and a renewed focus on innovation, the brand still has levers to pull in pursuit of a long-term rebound.
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