Lululemon Stock Drops 14% in 2025 After CEO Highlights Reduced Consumer Spending
Lululemon's shares fell sharply despite strong Q4 results, as cautious consumer spending and a soft outlook impact the apparel retailer's stock performance in 2025.
Highlights
- Lululemon's stock declined significantly following a cautious forecast for Q1 and full-year 2025.
- The company reported strong Q4 earnings that surpassed analyst expectations year-over-year.
- CEO Calvin McDonald emphasized subdued consumer spending and slower store traffic as key challenges.
Shares of Lululemon Athletica (LULU) dropped sharply on Friday, leading the S&P 500 decliners after the company issued a conservative outlook that overshadowed its impressive fourth-quarter earnings reported Thursday after market close.
For the quarter ending February 2, Lululemon posted earnings per share (EPS) of $6.14 on revenues of $3.61 billion, beating analyst estimates of $5.88 EPS and $3.58 billion revenue, according to Visible Alpha. Despite this, comparable store sales growth was a modest 3%, slightly below expectations.
Looking ahead, Lululemon forecasted Q1 EPS between $2.53 and $2.58, with revenues ranging from $2.34 billion to $2.36 billion. Full-year 2025 guidance projected EPS of $14.95 to $15.15 and revenues between $11.15 billion and $11.3 billion, all figures falling short of consensus estimates.
CEO Calvin McDonald noted, "Consumers are spending less amid growing inflation and economic concerns, leading to reduced foot traffic across the U.S. retail sector, which is reflected in our business performance."
During trading, Lululemon shares declined approximately 14%, hitting a low of $287.50, their lowest since October 2023.
Analyst Revisions on Lululemon Stock
Following the earnings release, JPMorgan and UBS analysts lowered their price targets for Lululemon stock to $391 (overweight) and $335 (neutral), respectively. UBS expressed skepticism regarding the company’s ability to sustain previously forecasted double-digit EPS growth, while JPMorgan highlighted industry-wide traffic declines and potential margin pressures from tariffs and currency fluctuations in 2025.
Note: This article includes the latest updates on Lululemon’s share price.
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