Lululemon Cuts Outlook Citing Tariff Impact, Stock Drops 15%

Lululemon Athletica is facing a challenging period marked by slower U.S. sales and a significant profit outlook reduction due to higher tariffs and the removal of the de minimis exemption, which is expected to cost the company $240 million this fiscal year. CEO Calvin McDonald acknowledged deeper product-related issues, including overextended product life cycles and missed opportunities in key categories such as lounge and social wear, contributing to the brand's recent struggles. Despite exceeding earnings per share expectations, the company's revenue missed projections, leading to a downward adjustment in its forecast. Analysts remain optimistic about Lululemon's future, with an average one-year price target suggesting a potential 32.88% upside, and brokerage firms rating the stock as an 'Outperform.' GuruFocus projects an even higher potential fair value, indicating significant long-term growth prospects. The stock dropped over 15% in after-hours trading following the outlook revision, reflecting investor concerns over tariff impacts and execution challenges.