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 tepid US demand and tariff costs.
The firm cut its annual profit forecast for the second straight quarter on Thursday as it grapples with pressure from losing market share to rivals, a volatile macroeconomic backdrop and tariffs that are hurting consumer discretionary spending.
Its shares have tumbled over 40% this year, with efforts to improve sales through weekly product launches having little effect as American shoppers head into the holiday season.
"We have let our product life cycles run too long within many of our core categories," CEO Calvin McDonald said in a post-earnings call on Thursday, according to Reuters.
Comparable sales for its Americas segment, its largest, declined 1% while international sales rose 15%.
"The US drives the earnings and the US is fading fast here," Jefferies analyst Randal Konik said in a note.
"Rising competition won't stop either, which means LULU's earnings per-share is permanently impaired," Konik added.
The company expects annual profit per share between $12.77 and $12.97, down from $14.58 to $14.78 earlier.
It expects an impact of about $240 million on its 2025 gross profit from higher tariffs and the removal of the de minimis exemption.
The yogawear maker, which relies heavily on US import tariff hotspots like Vietnam and mainland China for its raw materials and manufacturing, has been on the receiving end of heavy duties from President Donald Trump's trade policies.
Lululemon's forward price-to-earnings multiple, a common benchmark for valuing stocks, is 13.82, well below Nike's 39.21, according to data compiled by LSEG.
