Lululemon (LULU) stock is under heavy pressure in premarket trading Friday after the athletic apparel maker posted disappointing quarterly results and issued guidance that fell well short of expectations. Shares tumbled sharply in early action, reflecting mounting concerns about slowing momentum in the U.S. market and a fading product pipeline that has left once-loyal shoppers underwhelmed.
The company’s earnings report highlighted multiple headwinds: a soft domestic environment, margin compression and the fallout from changes to import rules — including the removal of the de minimis exemption that has made cross-border shipments more expensive. Retail sources say Lululemon has been struggling to produce “must-have” items over the past several months, making it harder to maintain the brand’s historically premium appeal. Rebuilding that buzz, they say, will take time.
Analysts were quick to note the breadth of the challenges in their early-morning notes to clients. “Challenges from domestic market pressures and removal of the de minimis exemption are primary drivers of a meaningful cut to FY25 guidance (implying -4.4% lower 2H revenue and -22% lower 2H EPS at the midpoint),” wrote Stifel analyst Peter McGoldrick. “Acknowledgment of underperformance within the casual side of the business (40% revenue mix) is a starting point, though reigniting brand momentum in the U.S. is likely to take longer than we had previously anticipated.”
Jefferies analyst Randy Konik was even more blunt. “It’s very simple… With sales per foot 4x mall average and margins near peak, LULU’s fundamentals will get much worse ahead,” he wrote. “The U.S. drives the earnings and the U.S. is fading fast here. We believe the guide is not low enough and continue to carry estimates well below the Street/company guide. Rising competition won’t stop either, which means LULU’s EPS is permanently impaired. With lower growth and brand strength fading, a lower multiple is warranted.”
Taken together, the remarks paint a picture of a company at an inflection point. Lululemon, long viewed as a growth powerhouse with enviable pricing power, is now facing a tougher competitive landscape and a consumer base that is shifting spending habits. While its international expansion remains a bright spot, the U.S. still accounts for the majority of profits, and the latest guidance suggests a sharp slowdown ahead.
The sell-off underscores how high expectations had become for Lululemon’s execution. Shares had been priced for continued double-digit revenue growth and industry-leading margins. Now, with management cutting forecasts and acknowledging missteps in core categories, investors are rethinking the company’s premium valuation. Unless Lululemon can refresh its product lineup, reignite excitement in its casual segment and fend off rising competition, analysts warn its stock multiple could continue to compress.
For now, Wall Street is bracing for a multi-quarter turnaround at best — and investors are voting with their feet in the premarket session.
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