Key Facts
• On September 4, Lululemon revised its earnings outlook downward for the third consecutive quarter.
• The company faces a $240 million tariff impact due to the removal of the “de minimis” exemption.
• The exemption previously waived tariffs on U.S.-bound e-commerce goods under $800.
• Lululemon’s Q3 revenue is projected at $2.47–$2.5 billion, below market expectations.
• Full-year revenue and earnings per share forecasts were also reduced.
• Following the announcement, shares dropped 16% as of 6:29 PM ET on September 4.
• Year-to-date, Lululemon’s stock has fallen 46%, erasing pandemic-era gains.
• CEO Calvin McDonald has implemented price increases and cut 150 corporate jobs in June.
• Q2 same-store sales rose only 1%, missing analysts’ 3% growth forecast.
• McDonald noted consumer fatigue, especially among long-term loyal customers.
• High-priced leggings face competition as cost-conscious consumers explore newer brands.
Summary
Lululemon Athletica has revised its earnings outlook downward, citing a $240 million tariff burden following the removal of the “de minimis” exemption by the Trump administration. The company projects Q3 revenue at $2.47–$2.5 billion, below market expectations, and has also lowered its full-year revenue and earnings forecasts. Shares fell 16% after the announcement, marking a 46% decline year-to-date. CEO Calvin McDonald has responded with price increases and workforce reductions but faces challenges as consumers, fatigued by economic pressures, shift spending to newer brands. Lululemon’s Q2 same-store sales growth of 1% fell short of analysts’ 3% forecast, further highlighting the company’s struggle to regain investor confidence.
