LULU Earnings: Lululemon Stock Collapses 20% as Full-Year Guidance Slashed
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The Vancouver, Canada-based company reported first-quarter financial results that narrowly topped Wall Street estimates. Earnings per share (EPS) of $2.60 was ahead of the $2.58 expected among analysts. Revenue of $2.37 billion narrowly beat the consensus estimate of $2.36 billion. Lululemon's gross margin was 58.3% in Q1, ahead of the 57.7% that analysts had expected.
Unfortunately, the decent print has been completely overshadowed by Lululemon's guidance cut. Management lowered their full-year earnings outlook, saying they now expect full-year earnings of $14.58 to $14.78. Previously, the company had forecast full-year earnings of $14.95 to $15.15. Analysts were looking for earnings of $14.89 for all of 2025.
Lululemon's net income. Source: Main Street Data
Manufacturing Overseas
Lululemon said that it is navigating a tricky environment due to uncertainty surrounding U.S. President Donald Trump's tariff regime. Lululemon is particularly vulnerable to import tariffs as much of its clothing and footwear is manufactured in foreign markets.
In 2024, 40% of Lululemon's products were manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 11% in Indonesia, and 7% in Bangladesh, according to the company. Lululemon does not own or operate any manufacturing facilities and relies on suppliers to produce its products, including its popular yoga pants. LULU stock has declined 14% this year.
Is LULU Stock a Buy?
The stock of Lululemon Athletica has a consensus Moderate Buy rating among 27 Wall Street analysts. That rating is based on 16 Buy, nine Hold, and two Sell recommendations issued in the last three months. The average LULU price target of $345.58 implies 4.47% upside from current levels. These ratings are likely to change after the company's financial results.
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