Vancouver-based apparel retailer Lululemon Athletica Inc. (Nasdaq:LULU) saw its share price plummet nearly 23 per cent in after-hours trading, after it released its earnings report this afternoon.
Investors were likely concerned that the company lowered profit guidance for the year, and it posted what some might have seen as weak same-store sales growth.
The share-price plunge to US$255.50, from a closing price today of US$330.78 came despite the company bettering what analysts were expecting in its first quarter, ended May 4.
Lululemon generated US$2.60 in profit per share in that quarter. Analysts polled by FactSet expected US$2.58 a share.
The company's quarterly revenue increased by seven per cent, year-over-year, to US$2.37 billion. That was marginally more than the street estimate of US$2.36 billion.
Projections had been that the company's same-store sales growth would be 4.1 per cent, but it turned out that Lululemon could only grow those sales by about one per cent for the quarter, year-over-year.
The company now expects its full-year earnings to be in the range between US$14.58 and US$14.78. That is down from prior guidance that it would be in the US$14.95-to-US$15.15 range. The new guidance's high end is also below what analysts had expected, according to FactSet.
Guidance for the current quarter was similarly weaker. Lululemon expects to generate a profit of between US$2.85 and US$2.90 in the current quarter. That is significantly below analysts' average projection of US$3.29 per share.
"They lowered their gross margin assumption due to both tariff impacts and higher discounting," said Matthew Jacob, equity analyst at M Science, in an email to BIV.
"The outlook for net revenues are tempered by economic uncertainty, especially in the U.S."
Lululemon CEO Calvin McDonald did not address U.S. President Donald Trump's tariff threats directly in the company's news release.
"As we navigate the dynamic macro-environment, we intend to leverage our strong financial position and competitive advantages to play offence, while we continue to invest in the growth opportunities in front of us," he said.
McDonald topped BIV's most recent list of the top paid public-company executives in the province. That list, which was released last year, noted that McDonald generated $22,269,598 in total compensation (converted from U.S. dollars) in 2023.
Lululemon added a net total of three new stores in the past quarter, ending with 770 stores
