Lululemon Athletica is one of the most popular brands today as the brand dominates multiple markets. Investors, however, aren’t excited at the recent performance of the company. Company shares value fell 10% due to economic uncertainty amidst tariffs on Mexico and China.
Lululemon Hurting
Lululemon’s annual revenue and profit both were below Wall Street’s expectations. The company believes that levies from Donald Trump have hurt their business, as well as lower consumer spending. Calvin McDonald, CEO of Lululemon said “Consumers are spending less due to increased concerns about inflation and the economy. This is manifesting itself into slower traffic across the industry in the U.S. in quarter one, which we are experiencing in our business as well.”
In addition to lower demand, Lululemon is also struggling to maintain market share amidst other high end athletic apparel brands like Alo Yoga and Vuori. Amidst the high competition, the company is still optimistic about the future. The company expects fiscal 2025 revenue to be anywhere between $11.15 billion and $11.30 billion. Investors, however, are hoping for higher earnings. Analysts estimated revenue should be at about $11.31 billion, slightly higher than the company’s estimate.
The company is also somewhat optimistic for investors. Lululemon expects earnings per share to be anywhere between $14.95 to $15.15. Investors, still, are hoping for higher returns. On average, analysts estimate an expected earnings of $15.30 per share.
Strong End to 2024
Even though investors are demanding more from the company, Lululemon leadership is hoping they can ride some momentum. Comparable sales rose about 3% in Q4 of fiscal year 2024 for the company. The company has notably done extremely well in Asia as sales rose 26% in China. Sales in the US, however, did not perform nearly as well. Of this, analysts at Jefferies said “The Americas biz comped flat year-over-year in 4Q, as inventories are rising and the outlook for ’25 appears muted. The theme remains that growth continues to fade, making further increases in sales and EPS challenging.”
Even though the US as a whole didn’t perform well for the company, quarterly revenue overall did well. The company posted $3.61 billion, slightly higher than $3.57 billion. While the company certainly is working hard to a better 2025, investors may need some results before they are fully convinced.
