Lululemon Slashes Sales Outlook as Tariffs, Weak Demand Hit Revenue

Lululemon Athletica's shares plummeted after the company slashed its full-year revenue and profit forecasts, signaling a slowdown in demand exacerbated by tariff pressures and consumer spending cuts. The removal of the US customs de minimis exemption has resulted in a $240 million hit to gross profit, with an expected $320 million impact on operating margin in 2026, prompting Lululemon to consider modest price hikes and vendor negotiations to offset costs. The company's US market faces particular challenges, including increased competition from luxury newcomers like Alo Yoga and lower-priced private labels, as well as consumer fatigue and longer product life cycles, leading to a 4% drop in same-store sales in the Americas. Internationally, China and other markets have shown growth, but macroeconomic concerns remain. Despite maintaining a premium brand image, Lululemon's competitive moat is shrinking amid the rise of copycat products, which threatens its market share. The company is attempting to revitalize its brand through athlete endorsements and a marketing shift, while investor confidence declines amid a 52% stock drop year-to-date.