By Kanchana Chakravarty (Reuters) -Shares of Lululemon Athletica plunged more than 17% in premarket trading on Friday after the athletic wear maker slashed annual profit and sales forecasts, hurt by
Lululemon Shares Drop 19% Amid Weak Demand and Tariff Concerns
By Kanchana Chakravarty and Savyata Mishra
(Reuters) -Lululemon Athletica's shares slumped 19% before the bell after the yogawear retailer signalled a tepid holiday season, citing lackluster demand and steep tariff costs.
The company, which was hopeful until recently that its weekly launches would boost holiday demand, slashed its 2025 sales and profit forecasts on Thursday.
Executives said sales fatigue in its Scuba and Dance Studio pants — popular among its loyal, high-value shoppers — has prompted a push to speed up innovation and reduce dependence on bestsellers.
Analysts noted the merchandise reset will take time and that demand could weaken further amid ongoing economic uncertainty.
"In light of a cautious consumer and competitive backdrop, LULU will need to further address its assortment, with the newness on the technical side not enough to offset softness," BTIG analyst Janine Stichter said.
At least seven brokerages trimmed their price target on the stock following results.
The company's shares, which have lost 40% of their value this year, were trading at $166.90 on Friday. Rival Nike's shares also slipped 1.5%.
Lululemon's U.S. sales have struggled amid rising competition from emerging niche brands such as Alo Yoga and Vuori, forcing it to shift its focus to new markets, especially China, to make up for sluggish demand at home.
"It's all about whether this brand can bend without breaking under tariff pressure and home-market weakness," said David Bartosiak, analyst at Zacks Investment Research.
Second-quarter comparable sales for Lululemon's Americas segment, its largest, fell 1%, while international sales rose 15%.
The company expects a hit of $240 million this year from higher tariffs on Vietnam and China, and the end of the de minimis exemption that previously let Lululemon ship items valued under $800 duty-free.
The company expects annual profit per share between $12.77 and $12.97, down from $14.58 to $14.78 earlier.
Lululemon's forward price-to-earnings multiple, a common benchmark for valuing stocks, is 13.82, well below Nike's 39.21, per data compiled by LSEG.
(Reporting by Kanchana Chakravarty and Savyata Mishra in Bengaluru; Additional reporting by Neil J Kanatt, Editing by Sonia Cheema and Shinjini Ganguli)
