TLDR
- Lululemon stock crashed 17% in pre-market trading after cutting Q3 revenue growth guidance to just 5-6%
- Trump’s tariffs and removal of de minimis exemption will cost the company $240 million this year
- US store traffic has slowed, particularly in women’s apparel, forcing reliance on promotions
- Company admits product cycles have “run too long” and become “too predictable”
- Stock now down nearly 50% year-to-date as premium pricing power weakens
Lululemon Athletica stock plunged over 17% in pre-market trading Friday after the company delivered a brutal one-two punch of tariff concerns and disappointing sales guidance. The athleisure giant now sits nearly 50% below its 2025 highs.
The company slashed its Q3 revenue growth forecast to just 5-6%, well below Wall Street expectations. This marks another setback for a brand that once seemed immune to retail headwinds.
Trump’s trade policies are hitting Lululemon particularly hard. The company expects tariffs and the removal of the de minimis exemption to cost $240 million this year. The de minimis rule previously allowed online orders under $800 to enter the US duty-free.
Chief Financial Officer Meghan Frank warned the tariff changes will have a major impact on earnings. The policy shift disrupts Lululemon’s US e-commerce shipments, which rely heavily on direct shipping from Asian manufacturers.
Most of Lululemon’s products come from China and Vietnam. This makes the company especially vulnerable to trade tensions between the US and Asia.
Domestic Struggles Mount
The tariff headache comes as Lululemon faces growing problems at home. US store traffic has slowed, particularly in the crucial women’s apparel segment. The company is now leaning on promotions to drive sales.
This promotional shift threatens Lululemon’s core strength: premium pricing. The brand built its empire on customers willing to pay full price for yoga pants and athletic wear.
CEO Calvin McDonald admitted the company’s product cycles had “run too long” and become “too predictable.” This suggests Lululemon has missed key trends that competitors have captured.
The company faces increasing pressure from lower-priced rivals like Vuori and Alo Yoga. These brands offer similar styles at more accessible price points.
McDonald said Lululemon is considering supply chain adjustments and cost cuts to offset tariff impacts. However, he warned these changes will take time to implement.
International Bright Spots
Not all news was negative in Thursday’s earnings call. McDonald highlighted “positive momentum” in overseas markets, providing some hope for growth beyond North America.
China remains a key growth engine for Lululemon’s international expansion. The company has been investing heavily in Asian markets to diversify away from its North American base.
The men’s apparel category also continues showing promise. This segment represents a major growth opportunity as Lululemon expands beyond its traditional women’s customer base.
However, these bright spots weren’t enough to calm investor nerves. The stock’s 17% pre-market drop shows how concerned the market has become about Lululemon’s near-term prospects.
The company announced earlier this year it would implement “modest” price increases due to rising costs. These hikes may become more aggressive as tariff pressures mount.
Other sportswear companies face similar challenges. Adidas warned tariffs will cost it €200 million and has already raised US prices. Nearly half of Adidas products are made in Asia.
Lululemon guided for Q3 sales between $2.47 billion and $2.5 billion, falling short of analyst forecasts. This represents the latest in a series of guidance cuts that have eroded investor confidence.
The stock now trades around $170 in pre-market action, down from peaks above $300 earlier in 2025. Key support levels sit at $165 and $152 if selling pressure continues.
Trading volume spiked Thursday evening as investors digested the disappointing outlook. The sharp selloff suggests many are losing faith in Lululemon’s premium positioning strategy.
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