The latest performance of sportswear brand Lululemon was lower than expected, and at the same time lowered its annual performance guidance, which caused a severe market reaction. As of the close of June 6, its stock price plummeted by nearly 20%. At the same time, the company announced plans to raise prices for some products, which will start from the second half of the current quarter and continue until the third quarter.
On June 5th local time, Lululemon released its first quarter report for the 2025 fiscal year. According to the results, Lululemon's net revenue in the first quarter of fiscal year 2025 was US$2.4 billion, a year-on-year increase of 7%; gross profit margin in the first quarter was 58.3%, compared with 57.7% in the same period last year; quarterly operating profit was US$439 million, accounting for 18.5% of net revenue, compared with 19.6% in the same period last year.
At the same time, Lululemon also released its performance guidance for the second quarter of fiscal year 2025. The company expects net income to be between $2.535 billion and $2.56 billion, with a growth rate of 7% to 8%; diluted earnings per share are expected to be between $2.85 and $2.90.
Analysts believe that the "big shock" of Lululemon's stock price this time was mainly due to the company's cut in its full-year performance guidance - it maintained its full-year revenue expectations of US$11.15 billion to US$11.3 billion, but its full-year operating margin outlook was lowered from a year-on-year decrease of 100 basis points to 160 basis points. This also caused the company's stock price to plummet by more than 22% after the market closed. As of the close of the day, the stock price closed down 19.8% to US$265.27 per share.
In the performance call, Lululemon CEO Calvin McDonald looked forward to the performance of each region, expecting North America to grow in low to medium single digits, mainland China will grow in 25% to 30%, and other regions will grow in revenue by about 20%. Meghan Frank, chief financial officer of the company, said that it continues to expect 40 to 45 new self-operated stores to be added in 2025, and the overall square footage is expected to grow at a low double-digit rate. The newly opened stores will include about 10 to 15 stores in the Americas, and the remaining stores are planned to be opened in the international market, most of which will be in China.
Meghan Frank also added on the conference call that Lululemon plans to carry out strategic price hikes item by item in its product range to mitigate the impact of tariffs. She added that the price increase will start from the second half of the current quarter and continue until the third quarter.
Text/Beijing Youth Daily reporter Zhang Xin
Editor/Beijing Youth Daily reporter Lin Lishuang Intern Li Zhengyu
