Lululemon’s stock plummeted 8.7% in after-hours trading Wednesday as the Vancouver-based athletic wear giant reported a significant profit decline in its first quarter, signaling potential trouble for the once-unstoppable athleisure powerhouse.
The company posted a profit of US$314.6 million for the quarter ending May 4, marking a concerning 12.3% drop from US$358.9 million during the same period last year. This decline comes despite a modest 5% revenue increase to US$2.2 billion—a growth rate that falls substantially short of the double-digit gains investors have come to expect from the brand.
“We’re navigating a more challenging consumer environment than anticipated,” acknowledged Calvin McDonald, Lululemon’s CEO, during the earnings call. “While our core performance products continue to resonate, we’re seeing more hesitation around premium-priced items as consumers become increasingly value-conscious.”
The disappointing results reflect broader shifts in the athletic apparel market, where competition has intensified and consumer spending patterns have evolved. Once the undisputed leader in premium athleisure, Lululemon now faces mounting pressure from both established rivals and emerging brands offering similar products at lower price points.
International expansion, once Lululemon’s most promising growth avenue, showed signs of deceleration with international revenue growth of 18%, down from 30% in previous quarters. The Chinese market, which the company had targeted for aggressive expansion, grew by only 7% amid increasing local competition and changing consumer preferences.
“The current macroeconomic headwinds in key markets are creating near-term challenges,” explained Meghan Frank, Lululemon’s CFO. “We’re adjusting our inventory strategy and promotional cadence to better align with consumer demand while protecting our brand positioning.”
E-commerce sales, which had been a consistent bright spot for the company, increased by just 3% year-over-year, suggesting potential market saturation and shifting online shopping behaviors. Meanwhile, comparable store sales rose a modest 2%, indicating stagnating performance in established locations.
Industry analysts express growing concern about Lululemon’s ability to maintain its premium positioning amid changing consumer priorities. “The slowdown raises questions about whether Lululemon’s premium pricing strategy remains viable in today’s more price-sensitive environment,” said Emily Rodriguez, retail analyst at Canaccord Genuity.
The company has responded by announcing a US$1 billion stock buyback program to boost investor confidence, while simultaneously revising its full-year outlook downward. Lululemon now projects annual revenue growth between 7-9%, down from previous estimates of 11-12%.
This earnings disappointment comes at a critical juncture for the athletic apparel industry, which is experiencing a post-pandemic recalibration as consumers reassess spending priorities. After years of explosive growth fueled by the work-from-home boom and fitness trends, the sector now faces a more discerning customer base.
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