Hi everyone,
I wanted to share my personal notes about the latest $LULU (Lululemon Athletica Inc) earnings this week. Before you read my article, please share your opinion, should we buy more of Lululemon in our portfolio ?
Looking at the direct impact f the earnings report, Lululemon shares dropped quite a bit after the company issued a much weaker full-year outlook, with tariffs taking a bigger bite out of profits than expected. The stock fell about 20% in after-hours trading and is now down more than 45% year-to-date.
For Q2, results were mixed. Look at the results, earnings were at $3.10/share (ahead of the $2.88 expected), but revenue was $2.53B, just below expectations. Gross margin slipped to 58.5% (−110 bps YoY), and operating margin narrowed to 20.7%.
The bigger issue was guidance and it is one of the main reason why the share price went down in my opinion. Full-year EPS is now expected at $12.77–$12.97 versus the expectations of $14.45. During the earnings call, the management said tariffs will reduce profits by about $240M this year. Q3 projections were also well below expectations.
CEO Calvin McDonald admitted that some of the brand’s casual and lounge products have grown stale and failed to spark new trends. To reset, Lululemon plans to refresh its assortment, raising the share of new styles from 23% to 35% next spring, and trying by improving fast-track design capabilities. The company emphasized that it won’t sacrifice long-term brand equity to chase short-term gains.
Overall, I feel like Lululemon is clearly feeling the impact of tariffs and product missteps at a time when U.S. demand is softening. Management knows it has work to do in order to reignite momentum. I personally believe the company can overcome the hurdle and prove to us that the company is not just a trend.
Have a nice weekend,
Guillaume Serdan... Show More
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Fri Nov 14 2025 16:57:11 GMT+0000 (Coordinated Universal Time)
