Lululemon, a sportswear brand listed on NASDAQ in the United States, has lowered its annual performance guidance, which has caused a severe market reaction.The stock price plummeted nearly 20% on June 6.
Acquiring the impact of tariffs
Downgrade the annual performance guidance
On June 5, local time, Lululemon released its first quarter report for the 2025 fiscal year. Performance shows that Lululemon's net revenue in the first quarter of fiscal year 2025 was US$2.4 billion, a year-on-year increase of 7%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 for 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 income, compared with 19.6% in the same period last year.
Source: Lululemon Financial Report
Lululemon also released its performance guidance for the second quarter of fiscal year 2025, but failed to meet market expectations. 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 stock price "shock" was mainly due to the company's reduction in annual performance guidance. Lululemon maintained its full-year revenue forecast of $11.15 billion to $11.3 billion, but its full-year operating margin outlook was down from a year-on-year decline of 100 basis points to 160 basis points.
Lululemon pointed out in his financial report that Tariffs imposed by the United States in April raised the cost of its operations in the United States, which could lead to a "significant decline in profitability.".
Even industry insiders expressed concerns about the inventory status of Lululemon. Because inventory has increased by 23% year-on-year, while sales have increased by only 7%, it suggests that the company may need more discount activities in the future to balance excess inventory.
Source | China Fund News
