Lululemon Athletica (LULU) shares tumbled sharply in early trading Friday following the company’s downgrade of its 2025 earnings guidance. While several analysts lowered their price targets, most stopped short of issuing full downgrades.
Despite meeting estimates, the athleisure retailer slashed its full-year guidance, citing rising uncertainty and expected tariff-related headwinds that could weigh on profit margins. The athleisure brand reported first-quarter earnings of $2.60 per share, up from $2.54 a year earlier, with revenue rising 7% to $2.37 billion. Both figures slightly exceeded FactSet estimates of $2.58 per share and $2.36 billion, respectively.
However, comparable sales grew just 1%, well below analysts’ expectations of 4.1%. Same-store sales in the Americas dropped 2%, while international comparable sales climbed 6%. Inventories swelled 23% to $1.7 billion by quarter-end.
For the second quarter, Lululemon trimmed its earnings guidance to a range of $2.85 to $2.90 per share, forecasting revenue between $2.535 billion and $2.56 billion. Both figures came in below FactSet estimates, which called for $2.94 per share on $2.549 billion in sales.
The company also lowered its full-year 2025 earnings outlook to between $14.58 and $14.78 per share, down from the prior range of $14.95 to $15.15. Sales for the year are now expected between $11.15 billion and $11.3 billion, closely aligned with analysts’ consensus of $14.70 earnings per share on $11.23 billion in revenue.
Following the results, numerous analysts cut their price targets for Lululemon stock but largely kept their ratings intact.
TD Cowen dropped its price target by 52 points but retained a buy rating, citing ongoing tariff and macroeconomic pressures impacting profitability.
Needham lowered its target from 366 to 317 while maintaining a buy rating, describing the stock’s sell-off as “aggressive” given the relatively modest earnings cut driven by tariffs. The firm noted sluggish domestic sales and a slowdown in international comparable sales growth, raising concerns about future momentum.
BMO Capital Markets cut its price target by 52 points to 250, marking the first full-year earnings downgrade by Lululemon in Q1 since 2014. It kept a market perform rating on the stock.
Other firms including Bank of America, BTIG, Baird, and Deutsche Bank also lowered price targets.
LULU stock plunged over 19% in early trading, dropping well below its 50-day moving average and other key technical levels.
Through Thursday, Lululemon shares were down 13.5% for 2025. The stock has a 21-day Average True Range (ATR) ratio of 3.07%, indicating moderate daily volatility.
The ATR metric, used by investors to gauge a stock’s typical price swings, suggests Lululemon’s price moves are neither extreme nor overly steady. As the S&P 500 and Nasdaq remain in strong upward trends, investors may tolerate ATRs up to 8%, though concentration in highly volatile stocks carries added risk.
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