Lululemon Tumbles 14% on Cautious Outlook and Tariff Concerns

Shares of Lululemon Athletica (NASDAQ:LULU) dropped over 14% on Friday, after the company issued a disappointing annual forecast, citing growing economic uncertainty and potential fallout from renewed U.S. tariffs under President Donald Trump’s administration.

Although the company beat expectations for the fourth quarter—reporting earnings per share of $6.14 and revenue of $3.61 billion, both above Wall Street estimates—investors focused on weaker-than-expected forward guidance, which painted a more cautious picture for the year ahead.

Lululemon now anticipates full-year EPS of $14.95 to $15.15 on revenue between $11.15 billion and $11.3 billion, falling short of analyst forecasts that had pegged earnings and sales higher. For the current quarter, the company expects EPS of $2.53 to $2.58 on revenue of $2.335 billion to $2.355 billion, also below Street expectations.

Executives cited softening consumer spending and declining traffic trends across U.S. retail, as economic concerns and inflationary pressures take a toll on shopper confidence. The company also acknowledged tariff-related headwinds—especially from China and Mexico—as a contributing factor, with 20 basis points of impact baked into its guidance.

Trump’s recently reinstated and proposed tariffs have injected further uncertainty into the retail sector. Lululemon joins peers like Walmart in warning that cost pressures and potential supply chain disruptions could erode demand and margins.

Despite short-term caution, the company is still projecting year-over-year growth, just at a slower pace than previously anticipated. Analysts have flagged weakness in North American operations as a concern, though some—such as J.P. Morgan—described the guidance as appropriately conservative given the backdrop.