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Investing.com -- Lululemon Athletica (NASDAQ:LULU) trimmed its fiscal 2025 earnings guidance on Friday sparking a broader selloff across European sports retailers.
The North American athletic apparel company now expects full-year earnings per share between $14.58 and $14.78, down from its prior range of $14.95 to $15.15.
Shares of Adidas (OTC:ADDYY), Puma (OTC:PMMAF) and JD Sports all traded lower to nearly 1%, while Lululemon was down over 21% in pre-market trade at 05:30 ET (09:30 GMT).
The revision reflects a projected 160 basis point decline in EBIT margin, driven largely by tariff-related pressures.
The company’s first-quarter performance was mixed. Revenue in the Americas rose 3%, but comparable store sales fell 2% year over year, following flat growth in the previous quarter and a 2% drop in the third quarter.
Weak U.S. market trends and declining mall foot traffic continue to weigh on performance, creating near-term challenges.
China, a critical growth market for Lululemon, also showed signs of deceleration. First-quarter revenue in the region grew 21%, compared with 46% growth in the fourth quarter and 39% in the third.
Comparable store sales rose 7%, a slowdown from 26% and 27% in the preceding quarters, respectively.
Operating costs added further strain. Selling, general, and administrative expenses increased by 160 basis points to 40% of revenue, surpassing expectations.
The company warned of continued SG&A deleverage for the remainder of the fiscal year, partly due to higher store labor costs as staffing levels normalize.
Lululemon’s inventory position also raised concerns. Inventories rose 23% year over year, while sales increased only 7%, pointing to a likely need for greater markdown activity to balance excess stock.
Despite the cut, some analysts maintain a bullish outlook. TD Cowen described the share price drop as "extreme," maintaining a “buy” rating, while noting that the EPS revision was only 2.5%.
Lululemon’s long-term target price remains $200, suggesting potential upside if execution improves and macro pressures ease.